OCCUPATIONAL PENSION SCHEMES (Hansard, 31 October 1986)

§ Mr. Howard
I beg to move, That this House doth agree with the Lords in the said amendment.

§ Mr. Speaker
With this it will be convenient to take Lords amendment No. 350.

§ Mr. Howard
This amendment reflects the result of consultations on the Bill's provisions in relation to occupational pension schemes. The reference in the existing clause 159 to management "through" an authorised person has caused some uncertainty, and some have questioned the position of trustees of occupational pension schemes. The new clause clarifies the requirement to be authorised. A person, such as a trustee, who is responsible for the management of investments held for the purposes of an occupational pension scheme will not be required to be authorised if he delegates day-to-day management of those assets to an authorised, exempted or overseas person. This does not mean that he would have to distance himself entirely from the management of the 596 assets. He would still be able to take what might be called strategic decisions, for example, about the proportion of the assets which should constitute investments of particular kinds, or the desired balance between growth and income and, indeed, his responsibilities as a trustee might require him to do so. Similarly, a trustee would not need to be authorised simply because the person managing the scheme's assets was required to consult him from time to time in particular circumstances, for example, where there was a takeover bid, where the manager had a conflict of interests, or where the transaction in question was particularly large. But a trustee would be required to be authorised if he regularly exercised discretion as to the sale or purchase of a particular investment.
The new clause also makes it clear that the requirement to be authorised in subsection (1) overrides, where necessary, the exclusion for trustees in paragraph 20 of schedule 1. If a trustee actively manages the assets of the pension scheme, he will have to be authorised even if he satisfies the conditions set out in paragraph 20.
Subsection (3) allows the Secretary of State to exclude certain managers of certain types of occupational pension schemes from the scope of subsection (1), and hence from the requirement to be authorised. It has been suggested to us, particularly in the context of small self-administered pension schemes approved by the Inland Revenue, that the provisions of the clause are inappropriate to some types of small schemes because they are effectively under the control of their members. I cannot at this stage say precisely which classes of scheme will be excluded under this provision. Clearly, approved, small, self-administered schemes are strong contenders, although the Government will wish to consider carefully whether all such schemes or only classes of them should be excluded. We should also want to consider whether the pensioner trustees of such schemes should continue to be required to be authorised. There may also be other classes of scheme in respect of which the power should be exercised.
I should stress that my right hon. Friend the Secretary of State for Social Services will need to consider carefully whether a scheme which is not managed by an authorised or exempted person should be able to contract out of the state earnings-related pension scheme under the new arrangements to be introduced under the Social Security Bill.

§ Mr. Howard
I beg to move, That this House doth agree with the Lords in the said amendment.
It is clearly essential that where the carrying on of investment business necessarily involves what, given the broad definition in the Banking Act 1979, must also be 597 regarded as the acceptance of a deposit, it must be the regime to be introduced under this Bill and not the inappropriate regime of the Banking Act which applies. However, the clause as originally drafted arguably went too wide, in that it could have permitted authorised persons to finance their business by means of an otherwise unconnected deposit-taking business without seeking the proper authority under the Banking Act. While it would have been possible to deal with this matter in the rules governing authorised persons, we think that it would be preferable to limit the exemption from the Banking Act on the face of the Bill. That is the first object of the amendment.
The second object of the amendment is to ensure that exempted persons, who will need to accept deposits for the same reasons as authorised persons, will also benefit from a similar exemption from the Banking Act.

§ Mr. Howard
I beg to move, That this House doth agree with the Lords in the said amendment.

§ Mr. Speaker
With this it will be convenient to take Lords amendments Nos. 354 to 365, 371 to 373, and 376.

§ Mr. Howard
These are technical amendments to adapt the Bill to take account of the different company law provisions in Northern Ireland. Amendment No. 376 is also a technical amendment. An amendment was introduced earlier to provide a definition of the exempt interests of recognised market-makers which will not be notifiable under sections 198 to 210 of the Companies Act 1985, but the corresponding provision for Northern Ireland was omitted. This amendment makes good that omission.

§ Mr. Howard
I beg to move, That this House doth agree with the Lords in the said amendment.

§ Mr. Speaker
With this it will be convenient to take Lords amendments Nos. 367 and 368.

§ Mr. Howard
These amendments are technical. The first closes a potential loophole which might have allowed assistance to be provided for purposes other than the acquisition of beneficial ownership of shares. The second modifies the definition of "connected company" in subsection (3). The third brings Northern Ireland company law into line with the Companies Act as amended by this clause.