JURISDICTION OF THE PENSIONS OMBUDSMAN

HC Deb 03 April 2000 vol 347 cc750-4

1. '.—(1) Section 146 of the Pension Schemes Act 1993 (functions of the Pensions Ombudsman) shall be amended as follows.
2. (2) In subsection (1), after paragraph (b) there shall be inserted—
   1. "(ba) a complaint made to him by or on behalf of an independent trustee of a trust scheme who, in connection with any act or omission which is an act or omission either—
      1. (i) of trustees of the scheme who are not independent trustees, or
      2. (ii) of former trustees of the scheme who were not independent trustees,
   alleges maladministration of the scheme,".
3. (3) In that subsection, for the words after sub-paragraph (ii) of paragraph (d) there shall be substituted—
   1. "and in a case falling within sub-paragraph (ii) references in this Part to the scheme to which the reference relates are references to each of the schemes,
   2. (e) any dispute not falling within paragraph (f) between different trustees of the same occupational pension scheme,
   3. (f) any dispute, in relation to a time while section 22 of the Pensions Act 1995 (schemes subject to insolvency procedures) applies in relation to an occupational pension scheme, between an independent trustee of the scheme and either—
      1. (i) trustees of the scheme who are not independent trustees, or
      2. (ii) former trustees of the scheme who were not independent trustees, and
   4. (g) any question relating, in the case of an occupational pension scheme with a sole trustee, to the carrying out of the functions of that trustee."
4. (4) After that subsection there shall be inserted—
   1. "(1A) The Pensions Ombudsman shall not investigate or determine any dispute or question falling within subsection (1)(c) to (g) unless it is referred to him—
      1. (a) in the case of a dispute falling within subsection (1)(c), by or on behalf of the actual or potential beneficiary who is a party to the dispute,
      2. (b) in the case of a dispute falling within subsection (1)(d), by or on behalf of any of the parties to the dispute,
      3. (c) in the case of a dispute falling within subsection (1)(e), by or on behalf of at least half the trustees of the scheme,
      751
      4. (d) in the case of a dispute falling within subsection (1)(1), by or on behalf of the independent trustee who is a party to the dispute,
      5. (e) in the case of a question falling within subsection (1)(g), by or on behalf of the sole trustee.
   2. (1B) For the purposes of this Part, any reference to or determination by the Pensions Ombudsman of a question falling within subsection (1)(g) shall be taken to be the reference or determination of a dispute."
5. (5) In subsection (3) (persons responsible for the management of the scheme to be the trustees and managers and employer), after "occupational pension scheme" there shall be inserted "or a personal pension scheme".
6. (6) For paragraph (a) of subsection (6) (exclusion of the Ombudsman's jurisdiction where court proceedings have been begun) there shall be substituted—
   1. "(a) if, before the making of the complaint or the reference of the dispute—
      1. (i) proceedings in respect of the matters which would be the subject of the investigation have been begun in any court or employment tribunal, and
      2. (ii) those proceedings are proceedings which have not been discontinued or which have been discontinued on the basis of a settlement or compromise binding all the persons by or on whose behalf the complaint or reference is made;".
7. (7) In subsection (7) (persons who are actual or potential beneficiaries)—
   1. (a) after paragraph (b) there shall be inserted— "(ba) a person who is entitled to a pension credit as against the trustees or managers of the scheme;" and
   2. (b) in sub—paragraph (i) of paragraph (c), for "paragraph (a) or (b)" there shall be substituted "paragraph (a), (b) or (ba)".
8. (8) In subsection (8) (interpretation) after the definition of "employer" there shall be inserted—
   1. "'independent trustee', in relation to a scheme, means—
      1. (a) a trustee of the scheme appointed under section 23(1)(b) of the Pensions Act 1995 (appointment of independent trustee by insolvency practitioner or official receiver),
      2. (b) a person appointed under section 7(1) of that Act to replace a trustee falling within paragraph (a) or this paragraph;".
9. (9) In subsection (1)—
   1. (a) for "complaints and disputes" there shall be substituted "matters";
   2. (b) in paragraph (b), for the words from "is to" to the end of the paragraph there shall be substituted "are references to the other scheme referred to in that subparagraph"; and
   3. (c) in paragraphs (c) and (d), the words "which arises", in each place where they occur, shall be omitted.
10. (10) Subsection (6) does not have effect in relation to proceedings begun before the day appointed under section 79 for the coming into force of this section.'.—[Mr. Rooker.]

Brought up, and read the First time.

Mr. Rooker

I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker

With this it will be convenient to discuss the following: New clause 22—Transfer to Financial Services Ombudsman of functions of Pensions Ombudsman and OPRA—

1. '.—(1) There shall be transferred to the Financial Services Ombudsman all the functions and powers of the Pensions Ombudsman established under Part X of the Pension Schemes 752 Act 1993 (as amended by the Pensions Act 1995); and the functions and powers of the Occupational Pensions Regulatory Authority shall be similarly transferred.
2. (2) The Treasury may by order—
   1. (a) provide for the transfer of any property, rights or liabilities held, enjoyed or incurred by any person in connection with functions transferred under this section;
   2. (b) provide for the carrying on and completion by or under the authority of the Financial Services Ombudsman of any proceedings, investigations or other matters concerned, before the order takes effect, by or under the authority of the Pensions Ombudsman or Occupational Pensions Regulatory Authority;
   3. (c) make any transitional, incidental or consequential provision which is necessary, or expedient as a result of the transfer of functions under this section;
   4. (d) provide for the substitution of the Financial Services Ombudsman for the Pensions Ombudsman or Occupational Pensions Regulatory Authority in any instrument, contract or legal proceedings made or begun before the order takes effect.
3. (3) The Treasury may make regulations providing for—
   1. (a) the transfer to the scheme operator of any staff previously employed in the service of the Pensions Ombudsman or Occupational Pensions Regulatory Authority;
   2. (b) the terms on which any such transfer shall take place; and
   3. (c) the terms on which the employment of any person previously employed in the service of the Pensions Ombudsman may be terminated.'.

Government amendment No. 84.

Mr. Rooker

New clause 32 will allow the pensions ombudsman to consider five new types of case, which I shall briefly describe. First, it allows independent trustees to take complaints or disputes with other trustees or former trustees of the same scheme to the pensions ombudsman. The independent trustees may discover that the actions of previous trustees were less than would have been expected. Currently, they would have to try to take the trustees to court, spending what may be limited scheme resources, or persuade a member to make a complaint to the pensions ombudsman on their behalf.

Secondly, there may be occasions when scheme rules are unclear on an issue. Trustees may have to go to court to obtain a ruling on the meaning, particularly when a scheme is winding up and the rules cannot be changed. The new clause will allow the trustees to ask the pensions ombudsman for clarification if at least half of the members of the trustee board agree to do so, with no cost to the scheme. Half or more of the trustees have to agree because we do not want to overturn the principle that the majority view of the trustees should prevail.

Thirdly, the new clause enables the pensions ombudsman to accept complaints about the employer in connection with personal pensions. Employers can have an increasing role to play in personal pensions, particularly in group personal pensions. Currently, a personal pension holder can complain about the actions of the trustees or administrators, but not those of the employer.

Fourthly, the new clause allows those who are concerned, for example, about the level of charges or the implementation of the pension share, to raise that with the pensions ombudsman. When a person has a pensions credit awarded in a pension-sharing case, they should be able to complain if it is not handled properly by the scheme.

Finally, a scheme member may raise an issue concerning their pension scheme with the wrong authority, such as an industrial tribunal, which in this instance can be considered a court. Currently, if they do so, even by mistake, the pensions ombudsman cannot later accept the case. The new clause ensures that he can accept the case if it has been referred to court and has been discontinued.

Amendment No. 84 makes consequential changes resulting from new clause 32.

The new clause fills gaps in the pensions ombudsman's jurisdiction. There is a range of issues that the pensions ombudsman can investigate, but there are some issues that he currently cannot investigate. There is no good reason why he should be prevented from doing so and it would be helpful to members and schemes if he could investigate those issues. We consulted on those measures in "Strengthening the Pensions Framework", the consultation document issued at the same time as the Green Paper. There was overwhelming support for them, and I commend the new clause to the House.

I turn now to new clause 22, to which I presume the hon. Member for Beckenham (Mrs. Lait) will speak. The matter was raised in Committee, and I agreed that it was a legitimate question that should be debated. We all want to ensure that pension schemes and other financial products are properly regulated and that there are routes to deal with consumers' concerns.

As my hon. Friend the Economic Secretary acknowledged when a similar clause was debated during the Report stage of the Financial Services and Markets Bill, there is a certain logic to the proposal. However, there are reasons why both the pensions ombudsman and the Occupational Pensions Regulatory Authority should remain separate from the Financial Services Authority and the financial ombudsman service.

I shall first clarify the current position. OPRA is a regulatory body that was set up to help to ensure that occupational pension schemes comply with the provisions of the Pensions Act 1995. That role is different from that performed by either the pensions ombudsman or the financial ombudsman service in that those organisations deal with complaints from individual scheme members, employers or trustees; they do not regulate. It would be inappropriate to combine the functions of a regulator with those of a complaint-handling body. That principle has been applied to the Financial Services Authority and the financial ombudsman service; they are separate and independent, although linked, organisations.

The financial ombudsman service's compulsory jurisdiction is linked to regulation by the FSA. If an individual or organisation is authorised by the FSA, they come within the compulsory jurisdiction of the financial ombudsman service.

On the other hand, the pensions ombudsman has jurisdiction over employers and trustees in relation to both occupational pension schemes and personal pensions. The jurisdiction is also compulsory in that there is no opt-out. Sponsoring employers and trustees of pension schemes are not authorised by the FSA and it would not be appropriate for them to be so.

Bringing the pensions ombudsman's functions into the financial ombudsman service would mean that employers and trustees would have to be authorised by the FSA, which would not be sensible; or that the clear link between authorisation and compulsory jurisdiction would be broken. It would not be practical to extend the financial ombudsman service's compulsory jurisdiction to include all those, such as trustees and sponsoring employers, who come within the remit of the pensions ombudsman.

It is important that consumers are clear about whom they should go to for advice and to complain. The common theme is the office of the pensions advisory service. OPAS handles information and guidance concerning personal pensions and occupational schemes, and will cover stakeholder schemes. It is ideally placed to steer consumers toward the most appropriate place for their concerns to be dealt with. Indeed, the Financial Services and Markets Act enables the financial ombudsman service, with the consent of the complainant, to refer a case to another body, such as the pensions ombudsman, for resolution by that body. Those provisions were included with the pensions ombudsman in mind, to ensure that the consumer can benefit from a seamless service in respect of pensions issues.

Furthermore, we shall work with both the financial ombudsman service and the pensions ombudsman to ensure that the lines between the two are clear and that consumers have access to the right organisation to deal with the concern raised. We want to ensure that consumers are clear about where their complaint will be dealt with.

I had to stick to my text, because it is important that we make clear the reason why we do not want to accept new clause 22. I hope that I have demonstrated that the Occupational Pensions Regulatory Authority, the pensions ombudsman and the financial ombudsman service operate in connected, but different, spheres and that there are therefore good reasons why those organisations should remain separate. However, I assure the House that we remain aware of the issue of clarity for the consumer. We shall develop ways in which to ensure that it is clear who consumers should approach. If, at any time, the Government fall down in that respect, I hope that right hon. and hon. Members will bring it to our attention.

Mrs. Lait

I am grateful to the Minister of State for his detailed explanation of the role of the pensions ombudsman, OPRA and OPAS. If it took so long to explain that to people who are interested in the subject, I dread to think how long it would take to explain to someone who was trying to navigate their way around the issue. However, as the right hon. Gentleman has been kind enough to set out the Government's reasoning clearly, we should like to go away and think about his comments, perhaps with a view to returning to the issues in another place.

Question put and agreed to.

Clause read a Second time, and added to the Bill.