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Baroness Hollis of Heigham: The Minister has drawn our attention to Clause 40, to which this is an amendment. I take little comfort from his reply, although I take comfort from the fact that under Clause 40(4) regulations may make exceptions to subsections (1) and (2), and this may be a case where a different government might seek to make regulations to do by regulation that which the Minister is not prepared to accept on the face of the Bill. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 142Q not moved.]

Clause 40 agreed to.

Clause 41 ["Blowing the whistle"]:

[Amendments Nos. 142R to 142W not moved.]

On Question, Whether Clause 41 shall stand part of the Bill?

Baroness Seear: I wish that this matter had not come at 10 minutes to 11 when the Chamber is

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practically empty because I regard the clause as very important and one that we should not accept. It should be considered in conjunction with the amendment rejected by the Minister in Committee last week when we asked to strengthen the regulator's powers. It is complementary to that desire to see a far stronger regulator able to take pro-active action, and to take it effectively, and it is why I oppose Clause 41.

Clause 41 relies for the operation of the scheme upon the whistle-blowing which will come primarily, if the Bill remains as it now is, from the accountant, the auditor or the actuary. It is not good enough to rely on those people to blow the whistle in order to make the scheme function properly. But that is what the Government are doing.

We believe that the responsibility should rest with the regulator. We want a different, much stronger regulator than is envisaged in the Bill, partly because we do not believe that it is satisfactory to put actuaries and administrators in a position in which they are serving the scheme or the company and at the same time reporting to the Minister. That is a conflict of interest about which they are much concerned. But while that is important, what is more important is that we are relying on the whistle-blowing coming from those professionals rather than being in the hands of an outside authority which can take action to see that the schemes are running properly.

I know that the Minister will say that there are 150,000 schemes and ask how a regulator can thus regulate them. Factory inspectors have been doing this for a long time. They go into an organisation whenever they see fit and take the action that they then think is necessary. Factory inspectors can do that. Why cannot the regulator do it to enforce the Bill's requirements? I know that the Minister is dead against this, but I want to put on record the fact that it weakens the scheme to rely on whistle-blowing by the actuary and the administrator. It is an excuse for not having the kind of regulator that we need, with the power that could be given were the Government prepared to spend the money.

This time of night is not the moment to have a great debate on the issue. I am aware that the Minister's mind is completely closed on this, but I want it on the record that this is not the right way to go about this; the scheme is undermined before it starts; and the regulator does not have adequate powers. I oppose Clause 41.

Lord Dean of Harptree: I hope that the clause will remain in the Bill. I like the concept of whistle-blowing. It is far better that the authority should concentrate on those schemes where something appears to be going wrong rather than crawl over the large number of schemes that exist.

Perhaps I may raise two detailed points with my noble friend the Minister before he replies. First, the Bill provides that if the auditor or actuary believes that something is going wrong he must immediately give a written report to the authority. I hope that that does not preclude giving those in the scheme the opportunity of putting things right.

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Secondly, as regards the whistle-blowing, reference is made in the clause only to the auditor or the actuary. I hope that it is made clear somewhere in the Bill that anyone directly related to the scheme—in particular, trustees or members of the scheme—will be able to blow the whistle if they believe that to be appropriate.

Lord Mackay of Ardbrecknish: The noble Baroness, Lady Seear, returned to an issue that we debated on the first day of Committee and on Second Reading. Perhaps I may say first to my noble friend Lord Dean that the lack of "immediately" in the scheme means that professionals might be inhibited from having informal contact with OPRA before making a formal report. We believe that wherever there is a suspicion of irregularity a report should be made and the authority should be left to decide whether or not that constitutes a breach of obligation. However, we shall continue to talk to the professional bodies about both the material matter and the immediacy to ensure that proper account is taken of their concerns.

I was asked whether only actuaries and auditors may blow the whistle and be heard. This is an important point and I re-emphasise that anyone associated with the scheme will be able to blow the whistle. Only the actuaries and the auditors will be under a duty to do so.

The noble Baroness, Lady Seear, is mistaken in her desire to widen the role of the regulator to be the investigator of every single scheme on a monthly or yearly basis. It is better that the regulator should concentrate on the schemes that have been brought to his attention and which may have something wrong with them.

The noble Lord, Lord Marsh, who I am sorry but not surprised to see is no longer in his place at this late hour, spoke eloquently to the Committee on this subject. He rightly drew attention to the fact that vigilance and whistle blowing by professionals, trustees and members themselves is an extremely effective way of preventing abuse. In the past, the problem was that there was no one with the power to act on such reports. By setting up the authority we are providing the means to investigate and act wherever a report either from those who have a duty or from any other source indicate that there is a need to do so. I urge the Committee to reject the noble Baroness's opposition to Clause 41.

Baroness Seear: I wish to raise one further point even at this late hour. The time when it is important for the regulator to go in is before things have developed into a serious condition. Surely, in real life what will happen will be that in relation to a borderline case, when things are beginning to look unsatisfactory but have not developed into a serious state, the temptation will be not to take action because it will be difficult. However, that is the time when action ought to be taken, not when the scheme has practically collapsed. Anyone can see that action should then be taken but it will be too late.

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I cannot believe that in real life one will have the kind of warning that is necessary; when it is doubtful that things are going wrong but nonetheless there are suspicions. If there is widespread whistle blowing from anyone who is interested that will be sufficient without putting the onus on the authority, which will believe that it is its responsibility but will be reluctant to undertake it.

Lord Mackay of Ardbrecknish: I hope that I have made clear to the noble Baroness that, whoever blows the whistle, the regulatory authority will look into the matter that is brought to its attention. We are saying that there is an obligation on the two specified people—the actuary and the auditor—to blow the whistle because we believe that they are in a special position.

In the circumstance of a scheme going wrong, which was outlined by the noble Baroness, if the regulatory authority carried out its weekly, monthly or annual inspection of the scheme the week before something went wrong, frankly, our criticism would be well made. That is why it is important that the actuary and the auditor are under an obligation to blow the whistle whenever they see something going wrong, and anyone else connected with the scheme is able to do the same.

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On Question, Clause 41 agreed to.

Clause 42 [Other responsibilities of trustees, employers, etc.]:

[Amendments Nos. 143 and 144 not moved.]

Lord Lucas moved Amendment No. 145:

Page 23, line 6, at end insert ("and for a prescribed period").

The noble Lord said: The purpose of this amendment is to enable us to require that scheme books and records should be retained for at least a specified period. I beg to move.

On Question, amendment agreed to.

Clause 42, as amended, agreed to.

Clause 43 [Resolution of disputes]:

[Amendments Nos. 145A and 145B not moved.]

Clause 43 agreed to.

Lord Lucas: I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.

        House adjourned at one minute past eleven o'clock.

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