HC Deb 30 October 1975 vol 898 cc1875-92
Mr. Higgins

I beg to move Amendment No. 28, in page 18, line 37, leave out 'it shall be the duty of the Board to' and insert: 'the Board may'.

Mr. Deputy Speaker

With this we are to take Amendment No. 45, in Schedule 2, page 31, line 33, at end insert: 'or (c) unless a levy is also raised on authorised insurance companies'.

Mr. Higgins

In Committee we debated at length and on several occasions whether authorised intermediaries should be included in the Bill and, secondly, the precise basis on which they should be included if it were decided to include them. One of the points that emerged between the beginning of the Committee stage before the recess and the meeting of the Committee after the recess was that many of the broking organisations—I think I am right in saying all four of them—were concerned that the proposals in the Bill for the claw-back of commissions might be copied overseas and that that could have a serious and deleterious effect on our balance of payments position. It emerged, surprisingly, that apparently no serious analysis of this had been carried out by the Department, nor had any consultations been held until shortly before the clauses concerned were reached. We therefore urged the Minis- ter to keep an open mind and to look into the matter between then and Report.

The clause covering intermediaries was not in the original draft of the Bill—it was inserted in another place—but the general feeling was that, if brokers had been involved in selling policies with a particular company which then collapsed, there was some case for a levy, or, more effectively, a claw-back being raised upon them. That is a simple and straightforward argument which can be easily understood.

But at the same time we should not take action which could adversely affect the economy as a whole. We therefore sought to alter the position so that we came back more to a central position and agreed at the end of the Committee that we should treat the whole matter with an open mind. This amendment rather takes us back to where we started, which reflects the fact that we should look at the question afresh in the light of further evidence. I hope that the Minister has been able meanwhile to have intensive consultations with the broking interests and to form a view of the importance of this situation.

The reason that the matter arises on this amendment is that, if the duty on the Board is removed and it is given discretion to take action of this sort, the repercussions overseas will be lessened. That is something for the Government to consider.

The second point which is covered by the amendment which is linked with this one—I almost said, "for reasons which remain obscure," but I am sure that I should not say that—is whether, if a collapse takes place, it is right that the levy should be made or the commission clawed back from brokers when no levy is made on the companies to finance the rescue. In a sense, this is an academic argument because it is difficult to envisage a rescue which required so little money that clawing back the commission from the brokers would be sufficient to finance it. But at the same time there is a feeling of unfairness that the situation I have described could arise.

Perhaps the Minister has a strong counter-argument—I am open to persuasion—but it seemed right to us, since the arguments were not exhausted in Committee, to revert to that point. But the main argument is the first one: it would be very sad if the Bill damaged our overseas earnings. The sums involved, I understand, are very great and the importance of our invisible earnings cannot be overestimated. They are not even, I think, overestimated by the Government's balance of payments seasonal adjusters, who are capable of overestimating or underestimating anything.

Mr. Clinton Davis

The House will find itself in some difficulty in dealing with the amendment. When the Government introduced amendments to these provisions in Committee, we were taken to task for trying to give the Board some discretion in the exercise of its powers to levy intermediaries. Some of the arguments that I sought to adduce may have been misinterpreted because I did not have that intention in mind.

We accepted the validity of the argument and the clause now imposes a duty to levy intermediaries who have received the necessary amount of income in the circumstances specified. The hon. Member for Worthing (Mr. Higgins) is now seeking to make the clause discretionary again, but in a way that we had not contemplated at the outset.

Mr. Higgins

I hope that I can explain that. My point simply was that I thought fresh evidence had emerged at a late stage from the brokers, who are emphasising this point about the balance of payments. To some extent it is a peg on which to hang the argument because I am sure that the Minister is anxious to enlighten the House on the balance of payments and it is difficult to see where else he will be able to do so.

8.45 p.m.

Mr. Davis

I suppose for that reason I should be grateful to the hon. Gentleman and not rebuke him.

I will deal not with the seriousness of the amendment but only with the peg upon which it hangs. I said in Committee that I would be very concerned if it could be established that the clause was likely to damage insurance interests overseas. The hon. Gentleman took that point as being the only really substantial point upon which he himself was prepared to debate the issue. But having looked at the position afresh—of course, the Government have held their discus- sions with insurance interests and I myself have discussed the matter in some detail with the various insurance interests at considerable length—I do not really see that an effect of this kind can necessarily occur.

It is argued that overseas administrations might simply imitate this clause. That view is based on the argument that we in this country have a leading position in insurance and that, therefore, others might follow the precedent we have established. But that in itself is not a route which is worthy of much exploration because the clause applies only to long-term business. No extension into the general field is contemplated. Long-term business, in fact, as I understand, accounts for a very small proportion of our total overseas insurance earnings.

The levy will apply only to intermediaries who have done substantial business with the failed company. Foreign brokers who channelled business through Lloyds in the past would have no cause for concern unless, of course, one were to postulate that some companies are more prone than others to failure.

It is argued that overseas governments might introduce a different or more sweeping levy on intermediaries and that they would be able to quote the British clause as a valid precedent. If they want to introduce some claw-back principle of their own which would be damaging to us, they will do it regardless of whether or not we have invoked this clause.

My Department's research has indicated that the fears which have been expressed to us have not been made out. I hope they will not be made out, but experience, of course, will let us know. Anxieties, however, are very difficult to estimate as real possibilities. People in a negotiating position always put the worst possible gloss on a situation if it can redound to their advantage. That there are some anxieties there is no doubt, but I think this is essentially a negotiating position, and I do not think that the fears which have been expressed have anything like the substance which they are purported to have.

Mr. Higgins

The hon. Gentleman will, of course, accept that the position, so far as concerns legislation in, for example, Washington, follows on very subtle points, very often with massive pressures building up. If one lobby or the other can say that there is a precedent for this in another country affecting that country's nationals, that is a point which the hon. Gentleman, I am sure, will not accept totally as without importance. I think it is a real fear, and I hope the hon. Gentleman will bear that in mind.

Mr. Davis

I am well aware of pressure lobbies in Washington and New York, and that arguments will be adduced which are suitable to meet the case of those who put forward those arguments. If we were simply to resile from the position, if the House were to say "We do not want to pursue this at all", I have no doubt that it would be argued that we were doing this for our own benefit and that there was nothing to deter the Americans, if it was in their interests to do so, from pursuing that line. It is, as I have indicated, a fear that is exaggerated. I hope that my views on that matter will be borne out by events.

Mr. Michael Shersby (Uxbridge)

I am sure that the Under-Secretary appreciates that this is a serious matter. The whole question of our overseas earnings is one which hon. Members will want to think about carefully. I hope that there will be an opportunity to consider this aspect of the matter again when the Bill returns from another place. There is always the danger of overseas repercussions which are not easily seen when this type of provision is first considered. We do not want to get into the position in which the brokers have to pay and the company does not. This could possibly lead to repercussions and reverberations overseas of a kind we cannot easily foresee.

It is for this reason that we are discussing this aspect of the matter this evening. I hope that the Under-Secretary will be willing, as he always is, to have regard to our serious concern about this matter and will, if necessary, take a further look at it before the Bill finally completes all its stages in Parliament.

Mr. Roper

I hope that my hon. Friend the Under-Secretary will continue to resist this amendment in spite of the arguments advanced for overseas earn ings. This problem should be taken seriously. Together with other hon. Friends, I have not received from brokers significant evidence about long-term business. The amendment would place a majority of members of the boards of insurance companies in an impossible position if they had this discretion. The less they recovered from the intermediaries, the less they would have to levy on themselves. This argument was developed at some length in Committee and was accepted by the Opposition.

I believe that it is better for us to keep the clause as it stands and not to permit this sort of discretion by laying down, as we have in the clause, precisely how much should be contributed.

I turn to Opposition Amendment No. 45. This takes up the point which the Opposition made in Committee, that we should not have a situation in which only the brokers should pay. This point has just been made. Clause 18 imposes a duty on the Board to impose a levy on intermediaries on the scale which is set down, although if the Board does not need the whole amount which is required under the scale, it is obliged to refund the excess in accordance with subsection (7). Therefore, in the case of a particular failed company if, under the clause, the levy from the intermediaries were to raise more money than the Board's expenditure in connection with the company, Amendment No. 45 would presumably require the Board to impose only a nominal levy on the companies. Otherwise it would have to pay more back to the brokers. Technically, therefore, Amendment No. 45, as drafted, is probably defective.

The principle which was established by the clause in another place and which was argued for strongly in Committee, that the intermediaries should pay first on the scale laid down in the clause before the insurance companies were levied, is the right one. I hope that that will be maintained by resisting these amendments. It was the intermediaries who had received a substantial benefit from the failed companies, whereas the policy-holders in other companies had no connection with those failed companies.

Mr. Moate

I have on previous occasions declared my interest as an insurance broker. My concern about this clause will, therefore, be self-evident to a degree. I should make it clear that any interests that I have in insurance broking are little affected by this proposition. Equally, most of the leading members in the insurance brokers' associations who have been making representations to the Government would not be affected a great deal financially by the clause as it stands. I emphasise that, because the concern is not so much with the financial implications for these companies, many of which do a very small amount of life business in relation to their overall brokerage, as with the principle. It is about the principle that I want to talk.

I am concerned about the effect of the introduction of this principle on the position of British insurance abroad. I think that the Minister discounted this matter a little too easily. It is a much more important matter than he allowed. I am concerned that as a principle it is unfair. I am also concerned about the possible uncertainty it could cause in certain circumstances in company balance sheets. It is a difficult contingency to evaluate.

When Nation Life collapsed, and when any other company collapses or is likely to collapse, there was and will be criticism of the brokers or salesmen who have been most active in selling the policies. Obviously there are bad brokers as well as very good brokers. Selling methods can be criticised, as they can be in most areas of salesmanship. There can be very few hon. Members present tonight who have not taken up the cudgels on behalf of constituents when there have been examples of bad salesmanship. We are all concerned that there should be proper measures of consumer protection in regard to life insurance policies and to protect the public against unsatisfactory methods of selling insurance.

However, a great deal of the clamour that arose at the time of the Nation Life collapse, which has been echoed earlier tonight in the Chamber, was unfair and misinformed. I do not believe that the brokers as such were guilty parties in this matter.

I regret very much that in another place their Lordships introduced this principle into the Bill, and I think that they did so on a basis of misinformation. Admittedly, the principle has been amended somewhat, before it arrived at its present condition, but I regret that on this occasion the Government have seen fit to accept what their Lordships have done when on almost every other occasion recently they have decided to reject the advice of their Lordships. That is equally a matter of great regret.

However, if an insurance company gets into financial difficulties, whose fault is it? Is it the fault of the broker or the salesman? No. Clearly it is the fault, principally and primarily, of the managers of that company. But equally, because of the powers of supervision that the Department of Trade has accepted, it is now the fault of the Department of Trade. If a company is giving excessive benefits, excessive commissions or bad policies, surely it is up to the Department of Trade to spot this at a fairly early stage and to intervene. One cannot blame the brokers for continuing to sell a company's policies when presumably they have the assurance that the company is sound because it has not been prevented from underwriting by the Department. It is a little unfair to blame salesmen—leaving aside bad salesmen who may be selling wrong policies or using bad tactics. We cannot lay the blame at their door, vet that is what the clause seeks to do.

Let us assume that in the event of a liquidation there are others who have acted irresponsibly and have contributed to a company's downfall. Incidentally, to the extent that I understand the Nation Life collapse, that was not brought about by excessive commissions or, initially, through over-generous benefits. As I understand it, the collapse arose as a consequence of the collapse of its parent company, when it became clear that it was a very badly managed company in regard to its property portfolio.

Mr. Roper

While the hon. Gentleman may be right that it was the investment policy of the parent company which was responsible for the final collapse, will he not admit that that company and, indeed, many of the others which have failed in recent years have been the companies which have been paying excessively high new business commissions?

Mr. Moate

I do not know how to define excessive commissions. There are other highly reputable companies—indeed, some of those which have stepped in, as I understand it, to bail out the others—paying equally high commission rates, and rates higher than the commission rates normally agreed with the Life Offices Association.

9.0 p.m.

Mr. Peter Viggers (Gosport)

Does my hon. Friend agree that there are various ways of selling insurance policies? One way is to give large commissions to brokers. Another way is to give fairly small commissions to brokers but to spend a great deal on advertising. Why is the broker singled out in this provision and not the advertisers, who might also benefit from the sales methods?

Mr. Moate

My hon. Friend makes a valid point. The judgment about the insurance company must be made not on the basis of the commission rates it offers to the brokers but on the effect of that and other expenditure on the company's soundness. The only people who put themselves in a position of judging the company's soundness are the Minister and his departmental officials.

I do not understand, except as a result of the publicity that they have attracted, why brokers have been singled out for this treatment. We are concerned with a major principle of liquidation. The Government are saying that the brokers are a body of people from whom money can be recovered. What about other parties? Let it be assumed that an insurance company has produced unreal profits in a given year and that in the following year it collapses. Presumably the Inland Revenue will have done nicely from the company in the previous year. Should not the Revenue be made to refund some of the moneys it has made?

What about the company's auditors, and everybody else who has participated in the company? Should not all of them be made to repay something to the creditors? It could be argued that they should. Why is it just the brokers who are selected?

Some of the brokers might well have been employees of the company. There are different categories of broker. Some brokers are salesmen. Some are neo-employees of the company. If they are receiving a high rate of commission from the company, why should not those highly-paid staff or directors of the company be made to pay back some of their remuneration?

There are other principles involved, trespassing on the whole question of the processes of liquidation. We heard earlier how unsatisfactory the processes of liquidation are, particularly in the context of insurance companies handling life business, but, more generally, right across the board. Many companies take years to be liquidated and the ultimate beneficiary is usually the liquidator or the lawyer. It is seldom the creditor. I hope that the Minister will use the time he now has to endeavour to improve these measures and to ensure that creditors get a fair deal.

Mr. Ron Thomas (Bristol, North-West)

Is there not a personal relationship, often one of confidence, between brokers and clients? A person who receives a letter from a broker with a string of degrees after his name tends to think that the broker knows something about the business. Does the hon. Gentleman suggest that brokers should say in every letter they send out "We know nothing about the creditworthiness of the company."

Mr. Moate

It has never been the case that a broker is expected to pass judgment; it is not part of his professional duty to make a judgment about a company's financial stability. I agree wholeheartedly that there is a close relationship between a broker and his client and that a client will, to a large extent, depend upon the advice given. Most brokers must assume—I am talking, not necessarily about large City brokers, but about bank managers and small brokers throughout the country—that a company which is still allowed to operate by the Department of Trade is solvent. That is an assumption they are entitled to make. We have heard how many Nation Life policies were sold by reputable brokers and bank managers.

The ultimate responsibility goes back to the Department and the managers of the company. If one wishes to expand the principle of clawing back money from the people involved—whether agents, employees or the Inland Revenue—that is a matter for consideration, but why pick on brokers alone? The case has not been made out for this trespass on a major principle in the liquidation process.

Mr. Deakins

Surely brokers are professional advisers? Is the hon. Member saying they would be exempt not merely from the obligation to tell potential policy-holders about the firm whose policies they were selling but from civil action for negligence if they sold a policy of a company which subsequently collapsed?

Mr. Moate

I do not think there has ever been a case of professional negligence held against a broker following the collapse of a company. The broker cannot be held responsible. Admittedly, if I were a client I would kick my broker left, right and centre if he sold me a policy of a dud company, but as the law stands he is not responsible for that. We would be clawing back from them and not from others. This is a principle we ought to examine in far greater depth.

Mr. McCrindle

There are three elements in the sale of a policy—first, the policyholder who, up until now, has had little redress but who has been given some redress by this Bill; secondly, the insurance company which, up until now, has been relatively free from responsibility but has some responsibility thrust upon it by the Bill; and, thirdly, the broker who, according to my hon. Friend, should be the only element totally free of any responsibility. If my hon. Friend believes, as I do, that the sale of an insurance policy is an indivisible approach, how can he seek to approve of the impositions in regard to the company and the policyholder without bringing the broker into the exercise?

Mr. Moate

I am not trying to say that the broker should be exempt, but if we bring in the broker, why should we exempt all others involved in a company, up to the point of liquidation? A life policy may be sold by an employee, who receives a salary, or by a broker, who receives commission. That commission is the broker's income, and could have been spent before the liquidation occurs. I have grave doubts about the principle involved here. I apologise for having been drawn into a longer argument on this point than I originally intended.

Only quite small amounts of commission could be recovered by a levy in the case of Nation Life—probably less than will be received by the Department of Trade for its audit—and it would not have a very great effect on policyholders. This emphasises the advantage of the discretionary power proposed in the amendment, as opposed to the obligation to impose a levy on agents. The amendment is a helpful compromise, and if the Government cannot accept it tonight, I hope they will see whether it could be incorporated in the Bill in another form. We have gone into this matter rather quickly and without enough concern for the principles and practical implications of what we are doing.

Finally, I come to the effect on British business abroad. Britain is a successful international insurance country only because we have operated much freer of restrictions than have other countries. We have been international, where they have built up national restrictions and have scrutinised and supervised their industry in a way which has never been done here. This has allowed British business to be truly international and to spread across the world.

If foreign countries see Britain placing more and more restrictions on its own operations, certainly and ultimately they will try to emulate that to our disadvantage. British brokers earn vast sums abroad, and if we encourage the principle, admittedly restricted to long term—that is, life business, at the moment, though it could be extended—why should not other countries emulate us and introduce claw-back provisions on all brokerage earned in their countries? This would place an enormous contingent liability on British broking firms abroad.

This is a danger which is hard to evaluate, but it exists, and I hope that the Minister will think carefully about this point and also about giving some discretion to the Board before he finally decides to reject the amendment, if that is what he intends to do.

Amendment negatived.

Mr. Deakins

I beg to move Amendment No. 29, in page 19, leave out lines 1 to 12 and insert— '(2) Subject to section (The exempt income level for the purposes of section 18) of this Act and subsections (3) and (6) below, a person is an accountable intermediary of a company for the purposes of this section and Schedule 2 to this Act if—

  1. (a) he has acted as an intermediary for the company in relation to any relevant long term contract of the company; and
  2. (b) his income from the company in respect of his services (whether as an intermediary or otherwise) in relation to any such contracts (hereafter in this section and in section (The exempt income level for the purposes of section 18) of this Act referred to as "relevant services") for either or each of the two years comprised in the period of two years ending immediately before the time mentioned below in this subsection exceeded his exempt income level for the year in question.'

Mr. Deputy Speaker

With this amendment we may also discuss Government Amendments Nos. 32 and 38.

Mr. Deakins

During the debate in Committee on the Government's redraft of the levy provision, which is now Clause 18, some hon. Members pointed out that it renders liable to levy all of an intermediary's income over £5,000 from a failed company in the two years preceding the policy, whenever the insurance contracts concerned were effected. It was represented to me that it would be unfair for the levy to apply to renewal premiums on long-term policies—pensions policies were mentioned in particular—that had been effected many years earlier, when the intermediary could not possibly have been expected to anticipate a company's failure. This is a reasonable point, and I have provided accordingly that the levy should apply only to an intermediary's income over the exempt level in the two years before the failure in respect of long-term insurance contracts effected during those two years.

This is a much fairer formulation and meets, I think, the main objection to Clause 18 as expressed in Committee by hon. Members and outside Parliament by the brokers.

Amendment agreed to.

Mr. Tim Renton

I beg to move Amendment No. 30, in page 19, line 17, leave out subsection (3).

Mr. Deputy Speaker

With it we may also discuss Amendment No. 31, in page 19, line 25, after 'person', insert 'being an individual'.

Mr. Renton

The purpose of subsection (3) is that salaried intermediaries and those with exclusive contracts, or otherwise often known as tied brokers, should be absolved from the claw-back on intermediaries in the event of an insurance company failing.

It is hard to see the reason for these exclusions. We are informed from an authoritative source that life assurance is sold in the following proportions: 60 per cent. direct through salesmen employed by or working on commission for a life company; 30 per cent. through brokers; 10 per cent. through such persons as accountants and solicitors. If salaried intermediaries or people working on commission are excluded from the claw-back, a very large number of those responsible for selling the policies whom the Government wish to involve in the claw-back will be exempted.

9.15 p.m.

Here I take a different attitude from that of my hon. Friend the Member for Faversham (Mr. Moate). In logic, if intermediaries are to suffer claw-back, all of them should suffer it. I appreciate that there are difficulties in obtaining claw-back from individuals. They may not have the money to pay. It may be a year or two before the company gets into difficulties, and they will have spent their commission. But the fact is that those on commission in particular have a strong reason to push the policy that they wish the prospective customer to take up. Their remuneration will come only if they succeed in making a sale. In those circumstances it is only human nature that the commission man may not make that full investigation about which my hon. Friend spoke into the background of the company and the financial viability of the policy that he wishes to sell. His main concern will be to sell the policy, because it is only then that he will receive any earnings.

Therefore, in principle, the idea of excluding salesmen, commission men, from the claw-back is wrong, although I accept the difficulty of obtaining the claw-back from individuals. That is the basic reason why my hon. Friends and I have suggested that subsection (3) should be removed.

Amendment No. 31 is more specific. It accepts that individuals should be exempt, although that acceptance means exempting a large proportion of life assurance policies. The purpose of the amendment is to exempt only individuals, and to make certain that tied brokers are not exempt.

Mr. Roper

Will the hon. Gentleman explain the reasons for the amendment, as the first two words of subsection (3) refer to "an individual"?

Mr. Renton

I thank the hon. Gentleman for asking that question. It is precisely because those words are not repeated in the second paragraph of subsection (3) that we wish to have them in. The purpose of the amendment is to see that a person "being an individual" performing the services in question must not perform services of a like description for any other insurance company. We wish to exempt individuals but to catch some tied brokers.

Life not always being as clear and straightforward as we should all like it to be, and brokers making money only when they have succeeded in selling a policy, there is a danger that a broker who has an exclusive agency may pose as someone giving independent advice. When he is seeking business he may not come totally clean with a prospective customer and say "I am acting solely on behalf of the XYZ Insurance Company", so that the customer knows from the start that he has an interest in selling only XYZ policies. The broker may give the impression that he has examined all the policies and thinks that the best one for the customer is the XYZ policy. He may not make it clear that it is only if he sells such a policy that he will earn commission, and that he is permitted to sell only an XYZ policy, because he has an exclusive agency from that company.

Having considered the matter carefully since the Committee stage, we felt that no valid reasons had been advanced why tied brokers who were not individuals should be excluded from the claw-back. I shall listen with interest to what the Minister says, but I hope that, on reflection, the Government will be able to accept Amendment No. 31. We believe that it would make the claw-back from intermediaries more effective.

Mr. Deakins

Concerning Amendment No. 30, I am sure that it would be wrong for insurance company employees, and for full-time representatives of reputable companies, such as CIS agents, whose position is closely analogous to that of employees, to be subject to the threat of a levy, yet the effect of deleting subsection (3) would be to bring full-time agents within the scope of this clause.

I recognise that the subsection may result in the exemption of certain individuals who should, ideally, be covered—for example, members of a direct selling organisation. There was a reference to them in Committee. But I am advised that there is no way of drafting the clause so as to achieve this without also including people who should not be liable to levy.

With regard to tied brokers, I hope that what I say will meet the hon. Member's point. We propose shortly to deal with the problem of so-called tied brokers, under the regulation-making powers in the 1974 Act, by obliging them in doing business to make known the fact of their tied status. In any case, individual agents-cum-employees, who escape by virtue of this subsection, if they tie themselves to a failing company, are subject to the sanction of losing their livelihood.

I hope that the hon. Gentleman will be satisfied with those remarks and will withdraw the amendment.

I turn to Amendment No. 31. As my hon. Friend the Member for Farnworth (Mr. Roper) pointed out, the introductory words to subsection (3) refer to an individual, and the hon. Gentleman's point was that this did not necessarily apply to the second paragraph. I can assure him that it does. If he looks at the wording of subsection (3) he will see that it refers to a contract of exclusive agency, and that the second part of the subsection, as a separate paragraph, is merely defining a contract of exclusive agency. There is no doubt that the words "an individual" cover all the particular subsection.

Mr. Tim Renton

I was pleased to hear from the Under-Secretary that the Government are proposing to tackle this problem via the Insurance Companies Act 1974, and I understand that effectively, in future, when a tied broker has a contract of exclusive agency he will have to inform his prospective customers of the fact that he is acting as the sales arm for that insurance company and is not therefore acting as an independent company which, having considered a wide range of policies, has decided to proffer this particular one.

That deals effectively with the point covered in our amendment. In those circumstances I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendments made: No. 32, in page 19, line 27, leave out subsection (4).

No. 33, in page 19, line 43, after 'to', insert: 'section (The exempt income level for the purposes of section 18) of this Act and'.

No. 34, in page 20, line 2, leave out '£, 5000' and insert: 'his exempt income level for that year'.

No. 35, in page 20, line 5, leave out '£5,000'and insert: 'his exempt income level for that year'.

No. 36, in page 20, line 11, after 'section ', insert: 'and section (The exempt income level for the purposes of section 18) of thils Act'.

No. 37, in page 20, line 16, leave out 'the purposes of this section'

and insert: 'those purposes'.

No. 38, in page 20, line 25, at end insert: '(7A) References in this section, in section (The exempt income level for the purposes of section 18) of this Act and in Schedule 2 to this Act to an intermediary of a company are references to a person who has acted as an intermediary for a company in relation to any relevant long term contract of the company. (7B) For the purposes of this section a person acts as an intermediary for a company in relation to a long term contract if, otherwise than as an employee of the company—

  1. (a) he invites any other person to take any step with a view to entering into a long term contract with the company;
  2. (b) he introduces any other person to the company with a view to his entering into such a contract with the company; or
  3. (c) he takes any other action with a view to securing that any other person will enter into such a contract with the company.
(7C) In this section "long term contract" means a contract the effecting of which by a company constitutes the carrying on by the company of long term business of either class in the United Kingdom, not being a contract of relevant long term contract of a company for reinsurance; and a long term contract is a relevant long term contract of a company for the purposes of this section if it was effected by the company within the period of two years mentioned in subsection (2) above. '—[Mr. Deakins.]

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