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Baroness Turner of Camden: My Lords, I rise to support the amendment moved by the noble Lord, Lord Ezra. I have put my name to it because I believe it to be essential to have the functions of OPRA clearly set out right at the very commencement of the Bill. The establishment of a regulatory authority was a key part of the recommendations of the Goode Committee. Indeed, the report went so far as to spell out what it thought the duties of the regulator should be. In Committee we on this side of the Chamber sought to persuade the Government to write into the Bill the recommended duties. The Minister was not prepared to

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accept that. Nor was he prepared to accept a much more modified form of wording which dealt with a monitoring role.

The form of wording suggested in this amendment is even more modified, as the noble Lord, Lord Ezra, said. It gives OPRA the duty of exercising general supervision. It seems to me that the role envisaged by the Government for OPRA is essentially a passive one. It seems to be to react to complainants and whistle-blowers. By that time, of course, irreparable damage can already have been done. Any powers such as those envisaged by Goode which involve the setting of standards, and the checking of trustees' or administrators' behaviour against such standards, have been excluded from the Bill and so has any general overview of the pensions field.

The Goode Committee said quite specifically,

    "The new legal framework we have recommended depends for its effectiveness on proper supervisory and enforcement machinery. We therefore recommend that the Pensions Regulator should have wide ranging functions and powers".


    "The tasks we have identified for the Regulator are substantial. If they are to be performed in the way we consider necessary for pension schemes to be properly safeguarded, it is important that the Regulator should be organised in an effective way and that the resources necessary should be made available".

As I have said before in discussions on this Bill, for many years I was a member of the Occupational Pensions Board. One of our problems was that people thought that we had much greater powers than in fact we actually had. It seems to me that we are in danger of repeating exactly that with the establishment of OPRA. At least the Occupational Pensions Board was not, and never claimed to be, a regulatory authority for the whole of the pensions field. But here we have some new legislation, the objective of which is to provide security for occupational pensioners and scheme members generally with a regulatory authority. But, unfortunately, unless we can have the Bill amended, that regulatory authority seems to have no greater powers, at least on paper, than the Occupational Pensions Board—perhaps even less, because the OPB does require certificates from the scheme actuaries stating whether the scheme is solvent, a statement from the scheme auditors that the accounts have been audited and, as a matter of routine, a copy of the accounts where they have been qualified in any way.

The board also has a duty to make reports to the Secretary of State on general issues of importance in the pensions field. It has produced a number of excellent reports, not all of which have resulted in legislation, although some have. After the board has gone, it is not clear whether anyone or any institution will have that function.

The Government's opposition to giving OPRA the type of role envisaged by Goode seems to be based on the large number of schemes. But many of the smaller schemes are insured schemes. There is no reason why there should not be a simplified, streamlined procedure for dealing with insured schemes. It is not satisfactory that, with large numbers of people (perhaps 20 million) relying on occupational schemes for the bulk of their

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retirement income, there should be a regulatory authority that does not have its functions clearly set out at the very commencement of the Bill. It should be a regulatory authority which lives up to its name and to everyone's justifiable expectations. I support this amendment.

3.15 p.m.

Lord Dean of Harptree: My Lords, this amendment appears to be contrary to the principles on which the regulatory authority is to be based. As I understood my noble friend the Minister at Second Reading and during the Committee stage, we were rightly told that it should be the job of the regulator, through the whistle-blowing procedure, to concentrate on those areas where he felt that there might be difficulties arising. Those seemed to me to be the right priorities to adopt.

If the regulator were to have the role of crawling over every single occupational pension scheme which is in existence, how many staff and how much in terms of resources would he require and who would meet the substantial cost involved? With great respect to the noble Lord, Lord Ezra, I do not believe that he gave the House any indication of what the cost would be. When my noble friend the Minister replies, if he is minded to accept this amendment—which I hope he will not—will he say what the cost will be either to the taxpayer or to members of occupational pension schemes?

Baroness Seear: My Lords, it was in order to meet the very point raised by the noble Lord, Lord Dean, that the terms of this amendment were changed from those introduced at Second Reading. That included the word "monitor", which could create the false impression that the regulator was intended, as the noble Lord said, to "crawl all over" all the 150,000 schemes. Nobody seriously imagines that any organisation can crawl all over 150,000 schemes. The provision is to give the regulator a responsibility for general supervision, which is a very different matter from saying that it has to supervise in detail 150,000 schemes.

Therefore, I hope that noble Lords will realise that what is proposed is not in the least what the noble Lord, Lord Dean, has said. It is a general supervisory function and, if the regulator has not got it, it is extremely difficult to see what function he will have. If that is not the function, why may we not be told in a clause which defines what the authority is supposed to do? It is most extraordinary to set up an authority and in the Bill which establishes it to say that an authority shall be set up and then give a list of the things it will do to carry out its duties without at any point telling us what the duties are. It is a matter of clarity and logic. In the tradition of legislation which we have passed on previous occasions, such an amendment should be included in the legislation before your Lordships' House.

The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, the amendment before us this afternoon seems to me to do two things. One is the rather innocent objective put forward at the beginning of this debate of trying to bring together in five or six lines for the layman, so to speak, what the regulator will do. As the debate has gone on,

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a second motive has come forward and has been rightly exposed by my noble friend Lord Dean of Harptree; namely, to extend the scope of OPRA's responsibilities much wider than those laid out in my speech in Second Reading, or indeed in my speeches at Committee stage, or than what is in the Bill itself.

It seems to me that the amendment may well achieve the widening to which the noble Baroness, Lady Turner, addressed herself, but I am not sure that it achieves the clarity which the noble Lord, Lord Ezra, set out to achieve. A quick and readily accessible guide to what the authority can do is already there at the beginning of the Bill. The part of the Bill containing the list of clauses shows a list of the authority's powers, which are provided in Clauses 3 to 13 and 87 to 92. It also gives a good indication of what those clauses are about. As the Bill goes through both Houses, further information about what those clauses do can be found in the Notes on Clauses published with the Bill.

It is a very risky business to put into a Bill clauses which are not supposed to do anything in their own right. It can cause problems when a particular clause is being interpreted in isolation in the courts. We do not want to compromise the provisions of Part I of the Bill. We do not want to risk widening or restricting the scope of the authority by introducing a general list of functions on the face of the Bill. The amendment could jeopardise our common interest, which is the protection of scheme members' interests.

The functions of the authority will be those conferred on it in the Bill. Its role is to investigate schemes; to ascertain whether regulatory provisions are being or have been complied with and to take action as the authority considers necessary to rectify any non-compliance discovered. Such actions could include the imposition of civil penalties, taking criminal proceedings and appointing, prohibiting or disqualifying trustees. Many of these are issues which we shall discuss during the course of the day.

In line with the Government's policy for enforcement agencies, the authority will be expected to publish information about the manner in which it will carry out its function and the standard it will be aiming to achieve. Thus the public will be able to find out about the authority, not by going to the Bill and trying to get it from five or six lines, but by getting it from information published by the authority itself.

We also intend to amend the disclosure regulations to introduce a requirement for schemes to disclose to their members the existence of the new authority. That should ensure that those in whose interest the authority is acting will be aware of and understand the authority's role. We believe that that will be an effective way of disseminating information in a readily digestible form. We do not want pension scheme members to have to go to a copy of an Act of Parliament simply to try to establish what the authority will do. If the aim is to try to inform the public and scheme members about what the authority will do, I must submit to the House that what I have suggested meets that bill.

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The wording of the amendment that has been suggested by the noble Lord, Lord Ezra, would go considerably further than simply specifying the functions of the authority which are conferred upon it by the Bill. It seeks to widen those functions to include,

    "general supervision over the operation of occupational pensions schemes".

The noble Baroness, Lady Turner, said that she saw that as one of the advantages of the amendment. However, as I explained in Committee, we do not want the authority to be a general supervisory body for the reasons that my noble friend Lord Dean mentioned. There are 150,000 schemes and I thought that we were all agreed in Committee that we do not want the authority to ghost every pension fund in the country. We want OPRA to have a range of well-defined powers to enforce compliance, with the specified obligations that are set out in both this Bill and the Pension Schemes Act 1993. We want it to target its resources and expertise accordingly, carrying out investigations where there are suspicions or reports of things going wrong or spot-checking schemes where it has good reason to think that there is a risk of something going wrong.

The noble Lord, Lord Marsh, pointed out in Committee that it is the members themselves and those actively involved in the administration and management of the schemes who are best placed to alert the authority to problems. That is why we are introducing the requirement for auditors, actuaries and trustees to blow the whistle on schemes which do not conform to the provisions of the Bill. We believe that that will be a far more effective means of ensuring that schemes comply with the law than giving the authority general supervisory functions which would increase its costs without, we believe, providing any additional benefit.

The noble Lord, Lord Ezra, prayed in aid the regulators for, among others, the telecommunications, gas and electricity industries. We do not believe that any of the bodies which the noble Lord mentioned is sufficiently similar in nature to the authority that we are proposing to provide a relevant analogy. The significant difference is that this authority is not intended to have general duties. Instead, it is intended that it will have the specific duties that are spelt out in the Bill.

The noble Lord prayed in aid Schedule 1(2). I must advise the noble Lord that those provisions do not describe or widen the functions of the authority. That paragraph simply enables the authority to discharge powers and functions which derive from the provisions of the Bill. The authority does not have completely unfettered power to do what it chooses. It can do only what the Bill allows it to do. There will, of course, be checks and balances to ensure that it acts in a fair and reasonable manner and uses its resources wisely. It will be accountable to Parliament through the Secretary of State, and will come within the jurisdiction of the Parliamentary Commissioner for Administration. I hope that that answers the point about Schedule 1(2).

We have had this debate before and I do not believe that it is reasonable to try to encapsulate in about five lines what the Bill does. I believe that the information that will be required by those people who need to know—pension scheme members and the like—will be

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provided by the steps that the authority will take and those that we shall ensure that pension schemes take. I believe that that will provide people with much more detailed knowledge of how the authority works than would the provisions set out in the amendment—and perhaps less legalistically.

Finally, if the four or five lines of the amendment were just a piece of harmless fun, your Lordships might think that it would be rather churlish not to add them to the Bill, but I hope that I have shown the House that they are a bit more than that. They introduce some new ideas about the duties and responsibilities of the authority. With that explanation, I hope that the noble Lord will feel able to withdraw his amendment. If he does not, I ask my noble friends to support me in the Division Lobby.

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