§ "41A Rights to information
§ (1) An auditor of an occupational or personal pension scheme—
- (a) has a right of access at all times to the pension scheme's books, accounts and vouchers (in whatever form they are held), and
- (b) may require any of the persons mentioned in subsection (2) to provide him with such information or explanations as he thinks necessary for the performance of his duties as auditor.
§ (2) Those persons are—
- (a) any trustee or manager of the pension scheme;
- (b) any person who is otherwise involved in the administration of such a scheme;
- (c) any person holding or accountable for any of the pension scheme's books, accounts or vouchers;
- (d) the employer in relation to an occupational pension scheme;
- (e) any officer, employee or auditor of the employer in relation to an occupational pension scheme or any person holding or accountable for any books, accounts or vouchers of the employer;
- (f) any professional adviser in relation to an occupational pension scheme;
- (g) any person who is otherwise involved in advising the trustees or managers of an occupational or personal pension scheme in relation to the scheme;
- (h) any member of the pension scheme;
- (i) any person who fell within any of paragraphs (a) to (h) at a time to which the information or explanations required by the auditor relates or relate.
§ 41B Offences relating to the provision of information to auditors
§ (1) If a person knowingly or recklessly makes to an auditor of an occupational or personal pension scheme a statement (oral or written) that—
- (a) conveys or purports to convey any information or explanations which the auditor requires or is entitled to require, under section 41A(1)(b), and
- (b) is misleading, false or deceptive in a material particular,
§ (2) A person who fails to comply with a requirement under section 41A(1)(b) without delay is guilty of an offence and is liable to a fine.
§ (3) However, it is a defence for a person charged with an offence under subsection (2) to prove that it was not reasonably practicable for him to provide the required information or explanations.
§ (4) If a person within section 4l (A)(2) is a company and fails to comply with section 41A, the company and every officer of it who is in default is guilty of an offence and liable to a fine.
§ (5) Nothing in this section affects any right of an auditor to apply for an injunction to enforce any of his rights under section 41A;".'.—[Mr Webb.]
§ Brought up, and read the First time.
Madam Deputy Speaker
With this it will be convenient to discuss new clause 36—Internal controls'Regulations may provide that trustees of an occupational pension scheme must secure that the scheme has appropriate and sufficient systems of internal control.'.
§ Mr. Webb
I beg to move, That the clause be read a Second time.
I thought that perhaps, after five and a half hours, I ought to move something. I hope that the House will accept that new clauses 35 and 36 reflect my expert parliamentary drafting, although the Institute of Chartered Accountants in England and Wales might also have had a hand in it, somewhere along the line. I was delighted to see that Members on the Conservative Front Bench had added their names to the new clauses.
§ Mr. George Osborne
The reason that we added our names is that we got the same letter as the hon. Gentleman.
§ Mr. Webb
I was wondering whether the Conservatives had put their names to the new clauses knowing that they had already been tabled, or whether 942 they got a bit of a shock when they realised that they had put their names to Liberal Democrat proposals. We will draw a veil over that, however.
The Institute of Chartered Accountants has asked us to raise a couple of important issues relating to the audit of pension funds. I should like to deal first with new clause 36, which is very brief. It attempts to mirror the provisions in the European pensions directive, as the Minister will know. Article 14 of the directive, with which the House will be familiar, states:The competent authorities shall require every institution located in their territories to have sound administrative accounting procedures and adequate internal control mechanisms.A number of points have been raised today to which the Government have replied that they are keen to ensure that the Bill reflects the pensions directive as closely as possible, to ensure that the United Kingdom is complying with it. What better way to do that could there be than to take the words from article 14 and incorporate them in the Bill after clause 202? It is the purpose of new clause 36 to ensure that the Bill uses the same terminology as the pensions directive. Given that the Government have said several times today that that is precisely what they want to do, I am sure that the Minister will accept our proposal.
New clause 35 has two parts. It attempts to mirror some of the rights of company auditors, and to apply them specifically to those who audit pension schemes. There are two issues involved here. First, the Companies (Audit, Investigations and Community Enterprise) Bill will introduce rights for general auditors to obtain information from companies, and from a wider group of people involved wits those companies, than is now the case, and the first part of new clause 35 would make the same provision for those who audit pension schemes. Auditors would then be able to require information from trustees, managers, administrators, advisers and others.
The second part of new clause 35, by analogy, looks at the requirement on company directors to make a statement in their report that they are not aware of any relevant information that has not been disclosed to the company auditors. Criminal penalties exist for those who knowingly or recklessly mislead auditors. Why should not those provisions apply equally to those who audit pension funds?. The trustees should be under an obligation to disclose any relevant information. The penalties would apply only if the trustees had recklessly and/or knowingly failed to disclose information to the trustees. The Government would not want trustees recklessly or knowingly to fail to disclose such information, so I am sure that the Minister will want to accept new clause 35 as well.
§ Mr. Pond
I have to tell the House that I have not added my name to the new clauses, not because I did not get the letter that the hon. Member for Tatton (Mr. Osborne) mentioned but because I have certain reservations about the proposals in new clause 35 to introduce new power s and offences in relation to the rights of auditors to obtain information. As the hon. Member for Northavon (Mr. Webb) has explained, the proposals mirror clauses in the Companies (Audit, Investigations and Community Enterprise) Bill, which has now finished its Committee stage in the other place.
943 The purpose of those clauses is to strengthen the rights of company auditors by entitling the auditor to require information and explanations from a wider group of people. It is perhaps understandable that that is being proposed here in relation to pension scheme accounts.
This is a complex Bill, and I am told to say that my officials are talking to officials in the Department for Trade and Industry about the possible application in relation to pension accounts. I suppose I could say that my people are talking to their people. In particular, we need to think about how the measure would interrelate with the existing requirements that we place on the auditors of pensions schemes and the role of the pensions regulator.
Because of the slightly different nature of the relationships between employers, trustees and professional advisers, there is already a legal requirement on employers to disclose to trustees any information that they reasonably require to perform their duties. The trustees have in turn a statutory duty to disclose to their professional advisers, including auditors, such information as may reasonably be required for the performance of the advisers' duties. The trustees also have a duty to make available to their advisers all requisite books, accounts and records as may reasonably be required for the performance of the advisers' duties.
It might well be that the current statutory requirements on the scheme regal ding disclosure of information to the auditor and to other professionals for their professional purposes are sufficient. I am not trying to pour cold water on the amendments, as we take the issues they address very seriously and are looking carefully at whether we need to change pensions law as well as company law.
With regard to new clause 36, article 14(1) of the European directive on the activities and supervision of institutions for occupational retirement provision requires us to ensure that every occupational pension scheme has sound administrative and accounting procedures and adequate internal control mechanisms. The effect of the new clause would be to provide a regulation-making power that we could use to require schemes to have appropriate and sufficient systems of internal control. I note that the power does not extend to prescribing what those controls should be or how the requirement could be enforced, and to that extent I am not sure how useful it would be.
There are a great number of procedures and controls in place as a result of current pensions legislation: chiefly the Pensions Act 1995 and the Pension Schemes Act 1993. For example, there are provisions relating to investment, scheme funding, production of audited accounts and annual reports, sending information to members, the appointment of professional advisers and record keeping. All of these are reinforced by a requirement on scheme professionals to "blow the whistle", a requirement that clause 59 of the Bill will extend to others involved in running the scheme.
Earlier today, we dealt with several Government amendments that arose wholly or partly from our work on the directive. The work is on going. We are still looking at how the existing raft of requirements fits into 944 the obligations under article 14(1) and the extent to which further action may be necessary. I suggest that it would be premature to accept the need for additional regulations, particularly of the unspecific nature proposed by the hon. Gentleman. On that basis—and on the understanding that we take the matters seriously, but need to work out how they can be brought together practically and properly—I hope that he will withdraw the motion.
§ Mr. Webb
I am grateful for the Under-Secretary's constructive response. My only observation is that he said that the existing obligation is on trustees to make available the information for which they are asked; in other words, to be reactive. I am not sure that there are strong obligations on them to be proactive when they are not asked for information, and to say, "But you need to know this." That is the thrust of new clause 35. But as the Minister has indicated that his people are talking to their people and that he takes the issue seriously—and given the lateness of the hour—I beg to ask leave to withdraw the motion.
§ Motion and clause, by leave, withdrawn.