The Committee met at a quarter past three of the clock. (Hansard, 8 July 2004)

§ Lord Skelmersdale
We now get to the nuts and bolts of the Determinations Panel which we discussed in brief on earlier clauses and on Schedule 1. I recall that my noble friend wanted to separate out Schedule 1, but we have dealt with that.
I find the Determinations Panel a most peculiar animal. I searched my first port of call, the Explanatory Notes, for an explanation of why it was there, what the policy behind it was and so on, but failed to find one. I then consulted the report of the Committee stage in another place, where I discovered that the Minister made a very bland speech.
[The Sitting was suspended for a Division in the House from 3.17 to 3.27 p.m.]

§ Lord Skelmersdale
During our short break, I recalled the shortest ever speech I made some years ago and now recorded in Hansard, which was "Ditto, my Lords". Perhaps I should show a little more courtesy to the Committee and start again.
I was saying that the Determinations Panel in Clause 10 is a most peculiar animal. It does not build on any experience that I can find of OPRA, which is replaced by the regulating authority in the Bill. So I looked at the Explanatory Notes, where I expected to find an explanation. Of course, I did not. The notes really reword the clauses in what one might call everyday layman's language but do not tell us much about the policy behind the nuts and bolts of the Bill, and certainly the nuts and bolts of the regulator.
All I could find was—unusually—in Hansard for the Committee stage in another place. The Minister made a rather bald statement: The creation of the determinations panel will not only enable best use of the regulator's resources but ensure that the regulator remains efficient and accountable. It will also provide a comfortable degree of objectivity whenever evidence suggest that action should be taken against those with responsibilities for pension schemes".—[Official Report, Commons Standing Committee B, 9/3/04; col. 58.] 168GC There is a whole chunk of the regulator that could do this job anyway.

§ The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham)
I take the noble Lord's point about the matter not being in the Explanatory Notes. That is why I produced six pages for the Peers' briefing pack, which the noble Lord has had since before Second Reading. I had hoped that that would make good any such shortfall and therefore would answer some of the questions that he might pose.

§ Lord Skelmersdale
The noble Baroness will have to wait and see. She does not yet know what the questions are.

§ Baroness Hollis of Heigham
The noble Lord must read the briefing pack.

§ Lord Skelmersdale
Of course, I have seen it and read it, and I hope I have understood it.
In another place, there was a suggestion that one of the reasons for this was that it would produce Chinese walls within the regulator, but I do not see how. The panel will be selected by the nominations or appointments committee—whatever it is called—of the regulator. I can find nothing in the Bill that says that a non-executive may or may not chair it. I rather suspect that it will be chaired by a non-executive. After all, the nominations panel is composed of non-executive members of the regulator. Perhaps we can clear up that matter straightaway. Can a member of the regulator chair the Determinations Panel?

§ Baroness Hollis of Heigham
No.

§ Lord Skelmersdale
Not even a non-executive?

§ Baroness Hollis of Heigham
No.

§ Lord Skelmersdale
In what capacity do the members act? One assumes that it is not a full-time job, even as a chairman. From the notes that the noble Baroness kindly sent us, we know the kind of people who will comprise the panel and who will be eligible for appointment to it; but we do not know how often they are likely to work, what they are likely to be paid, whether there will be expenses only, and so on. There are still quite a few points on which the note did not provide answers. I would be grateful if, in due course, the noble Baroness could answer those points.

§ Baroness Hollis of Heigham
Clause 10 provides that the regulator must establish and maintain a committee known as the Determinations Panel. The panel's duty will be to exercise, on behalf of the regulator, the reserved regulatory functions that are set out in Schedule 2. Schedule 1 deals with the regulator's functions and Schedule 2 with the Determinations Panel. Of course, the Determinations Panel is part of, although at the same time distinct from, the regulator. I can understand the need to probe our thinking on that. 169GC The decision whether or not to exercise any of those regulatory functions would also be reserved to the panel. The Determinations Panel must consist of a chairman and at least six other members. The chairman of the panel will be chosen by a special committee convened for that purpose and chaired by a non-executive member of the regulator. The non-executive member of the regulator chairs the selection committee which determines the independent chairman of the Determinations Committee. That may be where the misunderstanding occurred.
The remaining panel members will be appointed by the panel's chairman. None of the panel's members may be a member of the board or the staff of either the regulator or the pension protection fund. Those provisions will further enhance the fact that the Determinations Panel is effectively independent of other parts of the regulator.

§ Lord Skelmersdale
Clause 10(5) states: The following are ineligible for appointment as members of the Panel— (a) any member of the Regulator". From what the Minister has said, is one to assume that that includes non-executive directors?

§ Baroness Hollis of Heigham
Yes. The push behind the question raised by the noble Lord, apart from actually understanding and appreciating the structure, would be why it is necessary. That is what I want to address.
The push is that regulatory decision making will be kept, and needs to be kept, separate from the setting of strategy and other functions of the board. More importantly, it also separates the decision makers from the investigatory staff and, therefore, a degree of interdependence in the regulator's decision-making process.
In part, this model is based on the structure of the FSA. Section 395 of the Financial Services and Markets Act 2000 requires the FSA to separate its investigation and recommendation functions from the decision-making functions. To achieve that, the FSA has set up a regulatory decisions committee which effectively serves the same purpose as the Determinations Panel. When I met the FSA, I checked on that and it appears to be an entirely satisfactory way of working.
However, because the panel forms part of the office of the regulator, it will not be an independent and impartial tribunal within the meaning of Article 6 of the European Convention on Human Rights, which sets out the right to a fair trial. In other words, it goes part of the way to meeting human rights obligations, but it is not sufficient as it stands. That right will be secured by enabling directly affected parties to refer to the Pensions Regulator tribunal any of the regulator's determinations made by the regulator or the Determinations Panel.
However, the panel's separation from the members and staff of the regulator enhances the impartiality of decision making. That is particularly important when it is decided that a regulatory function must be 170GC exercised immediately in order to protect members of a scam—I mean, of a scheme, against a scam. I think that my Freudian slip was quite correct. In many cases, such actions may encroach upon individual rights, but the interference will be justified by the need to protect the interests and rights of others.
An example of such a regulatory action is the issue of a freezing order under Clause 20. For a short time, the order may have the effect of reducing the benefits payable to particular members. That is acceptable because the action is intended to protect the interests of the generality of members. However, I hope, and believe, that the fact that only the Determinations Panel may issue a freezing order on the regulator's behalf improves the impartiality of that initial decision.
Therefore, the creation of the panel will not only enable best use of the regulator's resources but will ensure that the procedures remain fair and accountable. It will provide a degree of objectivity for those concerned.
The noble Lord also asked me how significant we thought that responsibility would be. My best understanding is that, at present, that function is contained within the membership of OPRA, and the members exercising those functions take about 20 days a year. However, they are not full days; the members are paid allowances pro rata. Some of the problems that that causes have been pointed out to me. The chairman of OPRA goes into a huddle and then has to exclude herself from the decision making in order to try to invent Chinese walls, and everyone would be happier if they existed more effectively and publicly.
Therefore, we are seeking to improve the level of confidence in the decision-making process by separating the Determinations Panel from the rest of the body of the regulator. That goes part of the way towards meeting our compliance with ECHR. However, it does not go all the way, and therefore appeals can obviously be made to the pensions tribunal both from the regulator and the Determinations Panel. Clearly, if any party is unhappy with any of the regulator's proposals, the Determinations Panel is in a position to enforce them. It may decide that it wishes to amend them or it may ask either party to think again.

§ Lord Borrie
Before the noble Lord, Lord Skelmersdale, speaks, I must admit that I sympathise somewhat with the kind of questions that he put to the Minister. From what the Minister said, I now understand far more clearly than I did the clear separation, and the reasons for the separation, between the regulator and the Determinations Panel. But I still have a slight difficulty in understanding it from the wording in the Bill.
Clause 10 begins with the words: The Regulator must establish and maintain a committee". It is only later that we learn that no member of the regulator or any member of the staff of the regulator is allowed to be on that committee. To those of us who are familiar with authorities, councils and committees, the committee is a committee of the council or of the authority. In this case, that is only so in a very technical 171GC sense because, for perfectly good reasons which the Minister explained, there is not allowed to be any overlap whatever. I think that I have understood that correctly—the Minister is nodding her head. But, from the point of view of explaining the adjudicatory set-up, whether in Explanatory Notes or in the desire to publicise this issue to those who want to know about it, the use of the word "committee" in line 16 on page 5 of the Bill seems to be somewhat unfortunate.

§ Baroness Barker
I thank the noble Lord, Lord Skelmersdale, for raising questions in which I share an interest. The noble Lord, Lord Borrie, is right: the inter-relationship is not clear in the Bill. I want to ask the Minister whether, in choosing to follow the model of the FSA as opposed to the existing OPRA model, any calculation has been made about how much additional time it would take for the Determinations Panel to conduct and conclude its business. I ask that because time is a critical issue for those involved.
I assume that the Determinations Panel will have to get its information from the same sources as the regulator. How will all that be managed? Is the noble Baroness confident that those arrangements will be more efficient in terms of the panel's output?

§ Viscount Trenchard
I agree entirely with the remarks made by the noble Lord, Lord Borrie. I have been confused by these arrangements. Every time I read the Bill, it strikes me as strange that the regulator is a body corporate, a point the noble Lord drew attention to at Second Reading. Its board of directors are called members not of the board of the regulator, but of the regulator itself. That is confusing. A "member of the regulator" would exclude a member of the staff of the regulator since it refers to a member of the board of the regulator. I would much prefer words along the lines of "regulatory authority" rather than simply "the regulator". I hope that the noble Baroness agrees that it would be clearer if the regulator had a board.
Following on from the point introduced by my noble friend, which I strongly support, the Determinations Panel is a committee of, and maintained by, the regulator. How many members of staff will the panel have? Also, is it true that they will not be members of the staff of the regulator?

§ Baroness Hollis of Heigham
I do not want to take up the time of noble Lords, but it may help if I trace what might happen to a case in these situations so that we have a record of it in Hansard. The example was included in the briefing pack.
In a normal case, the regulator would have received information, either from a whistle blower or via the scheme return, of the failure on the part of the trustees to produce a copy of the scheme's annual accounts as required by the Pension Schemes Act 1993. The trustees' failure could point to a number of other breaches. It may be that they have failed to appoint an auditor or, more seriously, because of a failure to 172GC produce accounts because there is no schedule of contributions, which is vital to ensure that a scheme is properly funded.
The regulatory arm of the regulator would investigate the circumstances. It may consider whether its current information suggests that there are any other relevant risks. It could ask the trustees for an explanation or it could use its new information-gathering powers to acquire further data. If there appears to be no risk to scheme members and no reason to believe that the trustees are not in the process of complying, the trustees might be given a further period in which to comply. But if the work has not been started or if the trustees are not co-operative, the regulator might decide to issue an improvement notice to the trustees requiring a display of the accounts within a specified period. The regulator may also issue an associated third party notice if it appears that the trustees are being impeded by, for example, the scheme's auditors. I have been briefed on a case where exactly that happened.
All that would be done by the regulator. Should the trustees fail without reasonable excuse to comply with the improvement notice, they are liable to a civil penalty under Section 10 of the Pensions Act 1995. If in this case, as in any case where a Section 10 penalty could be imposed, the regulator believed the circumstances were such as to warrant such a sanction, at that point it could present its evidence to the Determinations Panel. The regulatory arm of the regulator would then consider whether the case represented an immediate risk, which might produce special procedures. If no such risk arose, the regulator could issue a warning notice to the trustees.
Having been alerted to the case because the regulator is sufficiently concerned and is minded to impose a Section 10 penalty, the Determinations Panel would consider the case put before it by the regulatory arm alongside any representations from those affected, which would be made in person, and other evidence presented. The decision of the Determinations Panel could be that the Section 10 penalty is appropriate, and it would notify everyone concerned. If the trustees were unhappy, they could apply to the Pensions Regulator tribunal, at which point the decision to impose the penalty would be suspended for the period. The tribunal would then consider the case afresh and consider any further evidence. The tribunal could confirm the regulator's determination, could direct the regulator to vary or revoke it or could substitute a different determination. Any party may refer the tribunal's decision on a point of law only to the Court of Appeal or, in Scotland, the Court of Session.
That is a fairly minor breach which may or may not conceal a major breach. The point at which you go beyond the powers available in Schedule 1 to the regulator and powers that would impose a sanction is when the case goes through to the Determinations Panel, which would hear the evidence from the regulator and any other evidence to decide whether it is appropriate. If that is not satisfactory, it then goes through to the pensions tribunal and, if necessary on a point of law, into the court system. 173GC That is the procedure. The evidence we have is that that happens very rarely. The evidence from OPRA shows that two to three people are needed for that function in the current OPRA proceedings. The time scale is 20 days part-time per member involved in that function. Obviously, that may expand—I am not saying that that is where it will necessarily end—but that gives us some indication of what is involved. Even now, with the relatively limited powers that OPRA has, the matter seldom gets into the heavy end. Given the more effective range of powers that the regulator now has, I would hope that fewer cases would end up in the determinations field. I would hope that the measure will be neither onerous nor oppressive.

§ Lord Skelmersdale
The Minister did not refer to the very helpful point made by the noble Lord, Lord Borrie. Clause 10(1) states: The Regulator must establish and maintain a committee consisting of—". Why cannot he establish a panel and then we would all know where we were? Perhaps the noble Baroness would like to take that away and consider it.
The noble Baroness referred to freezing orders, but they would constitute a very rare duty on the part of the Determinations Panel because the regulator, or the board of the regulator—whatever one likes to call it—will deal with that. We shall discuss that in a later clause. However, such a situation can arise. I refer to paragraph 20(6) of Schedule 1 on page 238 of the Bill—that is another reason why my noble friend wanted to separate out from Schedule 1 the parts referring to the Determinations Panel—which states: The Regulator may also authorise the Determinations Panel, in such circumstances as the Regulator may determine, to exercise on behalf of the Regulator such functions (other than those mentioned in sub-paragraph (2)(a) to (c)) as the Regulator considers necessary for the effective exercise by the Panel", and so on. So there is practically nothing that the Determinations Panel cannot do if the regulator wants it to do it, so far as I can see. That is what makes the matter so confusing for me.

§ Baroness Hollis of Heigham
I am not sure that that is problematic. The delegation constitutes one way only of dealing with the matter; namely, that the regulator may delegate some of his functions to the Determinations Panel. However, the Determinations Panel cannot do that the other way round, which is surely what we would want to see. Obviously, one wants the Determinations Panel to get involved when one is beginning to move into a quasi-judicial process and one therefore wants to give all parties the benefit of the doubt.
I absolutely take the points made about the terms that are used. The terms are decided by parliamentary counsel whose advice we must take. My understanding is that they decided on the term "board". I take the point that that could lead to confusion with the board 174GC of the PPF. We are dealing with the regulator, a panel and a board. That way, at least we have distinctive terminology.

§ Lord Skelmersdale
With the greatest respect, we do not. Clause 10 has the heading, "The Determinations Panel" but in the next line refers to "a committee". I do not think that that is helpful in the slightest. I am reminded of a comment made by one of my private secretaries when I was in the predecessor department to that of the noble Baroness, Lady Hollis, who said, "You'll be having the draftsman spitting blood". I do not mind if he spits blood, but let us get the legislation right.
Clause 10 agreed to.
Clause 11 [Functions exercisable by the Determinations Panel]:

§ Baroness Hollis of Heigham
moved Amendment No. 37: Page 6, line 19, at end insert— () section (Pension liberation: restraining orders)(10) (application to permit payments out of an account that is subject to a restraining order);
The noble Baroness said: The main purpose of Amendments Nos. 37, 40, 41, 42, 49, 50, 51, 52 and 171 is to introduce new clauses that are, I believe, a welcome and useful addition to the Bill.
Their purpose is to arm the Pensions Regulator with the necessary powers successfully to combat the illegal activities of those who establish and run pension liberation schemes. If we are talking about language, the one thing I object to is calling something that I regard as offensive and illegal "liberation". It is not a word that I would choose.
As these are new clauses on a new topic, I have sent letters to members of the Committee, and it may be worth spending a moment to say exactly what we mean by "pension liberation" and why it is a problem that has to be tackled.
"Liberation" schemes—the Committee will notice heavy, sarcastic quotation marks around "liberation" whenever the word is mentioned in this context—are scams that offer to convert the accrued rights—which has the normal everyday meaning of rights in occupational and personal stakeholder schemes—of members of bona fide pension schemes into an immediate tax-free lump sum. The organisers of liberation schemes use adverts to attract people who urgently need cash. The adverts offer to turn pension benefits into a tax-free lump sum. However, the people offering the service usually charge high commissions, ranging from 20 per cent to 30 per cent of the individual's total fund.
Transactions are often arranged using offshore companies and bank accounts. Typically, the individual's existing pension scheme will receive a request from the pensions liberator to transfer their pension money to a scheme in the name of a fictitious new employer created solely for the purpose of trust busting. The trustees of the ceding scheme will not be aware that the scheme to which it transfers the accrued rights is in fact a so-called liberation scheme. As well as paying up to 30 per cent of their pension rights in commission to the liberators, an individual could end up paying as much as 40 per cent tax on the total amount, making a total of 70 per cent. 175GC Pensions liberation poses a great risk to the security of pension scheme members' benefits. It also serves to frustrate the purpose for which Parliament has granted generous tax relief to approved pension schemes. However, it is important to note that pension liberation is not the same as pension unlocking. It offers a legitimate, although potentially risky, way for people over the age of 50 to take early retirement and release their pension benefits from an occupational or personal pension. Pension liberation, on the other hand, poses a serious and ongoing threat to the financial security in retirement of many members of occupational and personal pension schemes.
The question is how best to combat this threat. At present, OPRA is aware of a number pension liberation schemes. It believes that the money passing through those schemes is significant, possibly beyond the region of £50 million. OPRA has taken action in respect of these cases. In February 2003, the Inland Revenue, based on information passed to it by OPRA, secured a conviction against two men at Oxford Crown Court for offences relating to pensions liberation. Between them, they received five and a half years in gaol. If anybody is interested in that case, I can write to them with details. It was a real scam, and the judge took it very seriously.
The effectiveness of OPRA's action has been severely restricted by the inadequate powers it has to confront this type of abuse—a form of abuse that was not recognised when the Pensions Act 1995 was drafted. I asked whether we could tackle the problem of laundering money through the Proceeds of Crime Act 2002, but not even that Act can be relied on to recover moneys paid out of pension schemes in breach of trust. That is because not all actions in breach of trust are criminal offences. The Proceeds of Crime Act can be used only in cases where a criminal offence or something that would be a criminal offence if it happened in the UK has been committed. Sometimes it would be appropriate to use the Act to recover money, but not always.
That is why we believe that we should equip the Pensions Regulator with the necessary powers to act swiftly and decisively against the perpetrators of a particularly damaging scam. That is why we have introduced these new clauses.
I could go on to explain how the individual amendments will work, but I am aware that the Committee has a heavy agenda. However, I am entirely in its hands. I wonder whether I have given the Committee enough information about why we are doing this for it to accept the amendments. If not, I am very happy to continue to explain them in considerably more detail. I beg to move.

§ Lord Oakeshott of Seagrove Bay
We generally support the clauses, both the thrust of them and the way that they are likely to work. I just have two brief detailed questions. The first is on Amendment No. 50. Why is only the regulator able to apply for a restitution order? Why should not "liberated" members be able to 176GC do that if they find that they have been deceived by the managers of the liberator—supposing that they have been promised 100 per cent of their rights but got only 50 per cent? Why cannot an individual make that application?
The other question is on Amendment No. 51. Is it justified or proportional that a restraining order can freeze all the assets in a bank account, even if only some of them consist of money liberated from a pension scheme?

§ Lord Skelmersdale
I must admit that the same questions that the noble Lord, Lord Oakeshott, has just asked occurred to me. Pension liberation schemes, especially where charges are high—the Minister's helpful explanation says that they can be as high as 20 or 30 per cent of the value of the money taken out, which seems to be astronomical—are, in the words of 1066 And All That, "a Bad Thing"; in fact, I would go further and say that they were a very bad thing. Therefore, I am pleased that the Government are taking action to deal with that.
As the Minister points out, the tax allowances are given for a particular and peculiar purpose. They are not quite as generous as they were, thanks to the Chancellor of the Exchequer's activities over the past six years—but I will let that pass. The high-interest arrangements are of course happening in other walks of financial life, such as with store cards and credit cards. I should be interested to know whether the Government have plans for dealing with organisations that provide money for loan at a very high rate of interest.
I am not sure whether my next question is applicable to clause stand part, but there is a distinct relationship between subsection (6) and Schedule 2. It is somewhat repetitive, and one wonders why the draftsman decided that it was necessary. Amendments Nos. 49 and 50 seem, at first blush, to be a sensible way of dealing with a very bad practice. However, if the court, as it assuredly will, sends the money back to the pension fund or to the individual, does the Minister anticipate that it will send the full amount, or will the "liberator" keep some of it? If the liberator keeps some of it, the practice of liberation will not be stamped out.
I am surprised that the amendments do not refer to Clause 17 either instead or as well. After all, that is where we find the details—scrappy as they are—of restitution by the courts.

§ Baroness Turner of Camden
I thank my noble friend the Minister for the letters that we received and for the fact that we had the text of the amendments in advance. I found that useful.
I was not aware that pension liberation was going on on such a scale or that it was such a racket. The Government are to be congratulated on attempting to deal with that racket and attempting to protect the interests of very vulnerable people. I support the amendments.

§ Baroness Hollis of Heigham
I shall try to deal with all the questions that have been raised, but if I forget to answer one, perhaps noble Lords will come back to me.
The noble Lord, Lord Oakeshott, asked whether individuals could make personal representations. Yes, they can do so, if that is what they would prefer.
I turn to the point about the moneys, and I shall explain what Clauses 8 and 18, along with Amendment No. 52, seek to do. Restitution of the moneys owed may not happen if part of the money has been spent. We have tried to ring-fence the pension money, but if it is less than is stolen it cannot be made good. That is part of the problem, but it is also the case that the person perpetrating the scam may very well have mixed their personal money with that of the pension scam money, and there is not as yet any way of disentangling those. The person we believe to be the scam perpetrator may apply to the courts to access some funds to use for living expenses. That is what would be done here until the whole affair could be unscrambled and, as far as possible, restoration made to the victim.
This would also depend on how much money had been spent, how much had been laundered out of existence and so forth. However, the powers in these clauses would allow us to go after not only the money, but if it has been spent in bad faith on a property as opposed to a property further down the line in good faith, we could pursue that as well.
The power to freeze the entire account and then to allow an application for reasonable living expenses to be paid to an individual is apparently the same as that applied when a court freezes an individual's bank account under court procedure rules. It is a common occurrence because, as I have said, there can be mixed moneys.
Those are the reasons for these slightly elaborate provisions. I do not know whether my explanation answers the questions raised.

§ Lord Oakeshott of Seagrove Bay
I welcome the assurance given by the noble Baroness that an individual can apply for a restitution order, but is that what the Bill states? If not, will she amend it to give effect to what she has just said?

§ Baroness Hollis of Heigham
My understanding is that this does not have to be in the Bill, it is a basic right that pre-exists this legislation and will continue after it. However, I am happy to ensure that such issues, which are absolutely appropriate, are covered in codes of guidance and so forth. The array of rights afforded the individual will be set out in guidance, and not only the responsibilities of the Determinations Panel, the Pensions Regulator and the tribunal.

§ Lord Oakeshott of Seagrove Bay
It has now been recorded in Hansard.

§ Lord Skelmersdale
I am grateful to the Minister for that full explanation and for answering the questions put both by myself and the noble Lord, Lord Oakeshott. However, I have a sneaking suspicion that the noble Baroness has been a little gung-ho on this. In a few years' time I think that we shall have to revisit it because I am not entirely sure that it is going to work. That is a personal view.

§ Baroness Hollis of Heigham
My only comment on all this is that we face a dilemma that no doubt we shall debate again on other clauses. Many of us were involved in the discussions on the 1995 Act, at which time we acted in good faith. However, we have found that ingenious people, like those involved in pension liberation schemes, sometimes got around it because the powers that we bestowed on OPRA were too carefully detailed and too tightly drawn.
There is a real dilemma here. On the one hand, I share the view of noble Lords that they want to see provisions made specific in the Bill and do not like what I would call vague, prescribed powers. But the tighter something is drawn, the more it is possible for the ingenious and the extremely highly paid to get around it. We are trying to strike the right balance between being transparent and accountable in our intention, but leaving sufficient reserve power for the regulator or the Determinations Panel to address issues of scamming, cheating and fraud—the noble Lord is quite right to say that they certainly will emerge. The bodies will have the powers to do so without having to come back and ask for another piece of legislation.
As we go through this Committee stage, I shall repeatedly be asking noble Lords to bear in mind that need to maintain that balance because the more tightly drawn and explicit we are in the Bill, the more we run the risk of encountering the very problems that the noble Lord, Lord Skelmersdale, has rightly identified.

§ Lord Borrie
I understood the Minister, in response to the noble Lord, Lord Oakeshott, to say that the court's power to order restitution could apply whether it is on the regulator's application or an individual's. Indeed, the words are generalised enough to suggest that. But subsection (4) of the new Clause 50, towards the top of page 5 in the Marshalled List, states: The court, on the application of the Regulator, may make such order as the court thinks just and convenient", and so on, for ensuring that the proceeds are transferred towards a pension scheme or an annuity or to the liberated member. Unfortunately, I wonder whether the phrase, on the application of the Regulator", limits the court's powers if the regulator does not apply, but the individual does.

§ Baroness Hollis of Heigham
I shall check that, but my understanding is that these powers are complimentary to the Crown Proceedings Act which gives those powers to the individual. These clauses give power to the regulator and that is why they specify 179GC powers for the regulator. The individual powers run parallel and pre-exist by virtue of the Crown Proceedings Act.

§ Lord Borrie
And so would the court's powers be parallel?

§ Baroness Hollis of Heigham
Absolutely.
On Question, amendment agreed to.

§ Baroness Hollis of Heigham
moved Amendment No. 38: Page 6, line 21, at end insert— "() section 38(6A) (application for the issue of a revised contribution notice under section 38(6C));
The noble Baroness said: In moving Amendment No. 38 I shall speak also to Amendments Nos. 39, 43, 44, 113 to 115 and 132 to 134. Clause 11 contains the functions of the regulator that are reserved to the Determinations Panel. Where the Bill grants a person a statutory right to make an application to the regulator—for example, to appoint a trustee or to revoke a prohibition order—the Determinations Panel will deal with the application.
This trespasses on a territory which is more fully addressed under Clauses 35 onwards. I suggest that I do not go into that territory now as we do not want to have two debates on the matter. Currently, there are provisions contained in Clauses 38(6) and 45(6) to reduce any outstanding Section 75 debt due to the trustees or managers of an occupational pension scheme or to the board of the pension protection fund, as the case may be, when a contribution notice or a non-compliance contribution notice is issued and complied with. We are saying that when they pay some money it is docked off the debt. That seems to me to be entirely sensible and I hope that the Committee agrees. I beg to move.

§ Lord Skelmersdale
I do not object to the first substantive amendment. I suspect that the Government are right that there would be occasions when it would be right to reduce, or even write off, an outstanding Clause 45 debt. Clearly, firms will be delighted. I wonder whether the PPF will have the same reaction. Perhaps we can leave that until we get to it.
I have another drafting point. Why is it necessary to duplicate the Clause 11 amendment in Clause 45? I should be very happy if the noble Baroness writes to me about that and does not take up the time of the Committee.
On Question, amendment agreed to.

§ Baroness Hollis of Heigham
moved Amendment No. 39: Page 6, line 21, at end insert— "() section 45(7) (application for the issue of a revised contribution notice under section 45(9));
On Question, amendment agreed to.
Clause 11, as amended, agreed to. 180GC Schedule 2 [The reserved regulatory functions]:

§ Baroness Hollis of Heigham moved Amendments Nos. 40 to 44:
Page 244, line 34, at end insert— "The power to make or extend a restraining order under section (Pension liberation: restraining orders)." Page 244, line 34, at end insert— "The power to make an order under section (Pension liberation: restraining orders)(10) permitting payments out of an account that is subject to a restraining order." Page 244, line 34, at end insert— "The power to make a repatriation order under section (Pension liberation: repatriation orders)." Page 245, line 9, at end insert— "The power to issue a revised contribution notice under section 38(6C)." Page 245, line 13, at end insert— "The power to issue a revised contribution notice under section 45(9).
On Question, amendments agreed to.
Schedule 2, as amended, agreed to.
Clause 12 agreed to.
Clause 13 [Provision of information, education and assistance]:

§ Lord Skelmersdale
moved Amendment No. 45: Page 7, line 23, leave out ", education
The noble Lord said: I did not want to burden the Marshalled List by tabling amendments every time the word "education" appeared throughout the Bill, and therefore I decided to put down an amendment to the title of Clause 13. The question is very simple. I can understand assistance being given to employers, to persons involved in advising employers and to persons upon whom duties are imposed by virtue of Clause 228. I can understand the need for information and assistance, but why is education included? What, over and above information and assistance, does education provide and why is it necessary? I beg to move.

§ Lord Borrie
I should be sorry if the word were to disappear. Any regulator—I was one once—rather likes to have one or two positive roles in addition to the harsh and negative ones. Perhaps what I am saying is similar to what I said at an earlier stage in our deliberations on the Bill when similar opposition was mounted to a provision in an earlier clause.
Surely, the more information, education and assistance there is from the regulator, the less likely it is that people will get into trouble and do the things that they should not do. An educational role is positive and helpful to those who run pension schemes. No doubt it would be carried out in an indirect form, with information being made available for those whose job it was to run the schemes. But if the word "education" were excluded, it might send out a message that the regulator was to have a purely negative "policeman" role.

§ Lord Oakeshott of Seagrove Bay
As the noble Lord, Lord Borrie, said, this is to some extent a reprise of the discussions that we had on the previous occasion. I support the noble Lord, Lord Skelmersdale, on this 181GC matter. I think that it is unnecessary to include the word "education" and, as we said previously, it is a question of focus. There are only so many hours in the day and only so much that the regulator can do, and he should be focusing on the main job of regulation. The more that is broadened out into more remote issues, the less time he will have for the real job. Therefore, I think that the word "education" is unnecessary.

§ Baroness Hollis of Heigham
Before joining the House, I spent my entire career trying to distinguish between information and education so far as concerned my students. I knew that what mattered was education because, with that, one could find one's way to the information. I am sorry to see that the Committee has such a low opinion of its value.
It may be helpful if I give an example or two. Clause 13 would allow the regulator, where authorised, to help employers to understand, and comply with, any responsibilities they may have to provide their employees with access to pensions information and advice. As the Committee will know, where employers do not contribute to pension schemes, we are requiring them, should Parliament so agree, to make available pensions advice and assistance. We think that that will be a particular problem, or challenge, for small and medium-sized employers. They may find it extremely helpful to have some sense of what is expected of them in that role. I do not know whether that counts as information or education, but "education" is the process of achieving a culture of compliance and "information" is how one does it. I think that both aspects are needed in the Bill. We are considering e-modules and so on, but I hope that the Committee will accept the concept.
We are trying to ensure that if, for example, the regulator produces guidance and so on which helps to create that culture of compliance, in the Bill it will not be held to be ultra vires on the grounds that it goes further than a narrow definition of "information". I do not think that there is any doubt about the regulator's key job but, behind it all, he is trying to secure confidence in the pension structure of this country. Part of that is achieving a culture of compliance and understanding on the part of employers, employees and trustee managers.

§ Lord Skelmersdale
I doubt it, but I shall let the point go. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 46 not moved.]

§ Lord Skelmersdale
moved Amendment No. 47: Page 7, line 27, at end insert— "() representing members interests
The noble Lord said: I accept this is a badly drafted amendment and probably in the wrong place.

§ Lord Oakeshott of Seagrove Bay
Otherwise it is okay.

§ Lord Skelmersdale
Otherwise it is fine. I hope that the noble Baroness and her officials have managed to interpret the thought behind the amendment. The thought is that Part 1 concentrates on the relationship between employers, pension fund managers and the board of the regulator. There is very little about the interests of members, whose interests may on occasion be different from either their current or past employers' or the fund managers', especially when there is a danger of the scheme falling into the clutches of either the PPF or the Clause 274 financial assistance scheme, about which Members of the Committee have had so many representations. Perhaps the noble Baroness could briefly explain why. I beg to move.

§ Baroness Turner of Camden
Perhaps the noble Lord, Lord Skelmersdale, would confirm whether in saying that he wishes the regulator to provide information and so on to people representing members' interests he means trade unions. Presumably in this context he does.

§ Lord Skelmersdale
On this rare occasion, I do.

§ Baroness Hollis of Heigham
It is a pity that all three amendments were not grouped as they are on the same topic. I do not understand why there is such non-grouping when there is the same debate. This picks up on our debates yesterday on sectional interest. Our presumption is that the regulator's primary responsibility is towards the scheme trustees who are asked and expected to represent the best interests of all scheme members and, where appropriate, also the employer with the assistance of their advisers, scheme managers and administrators.
A general duty on the regulator to educate all 10 million scheme members in the country—something like 9 million in contracted-out schemes and 1 million in contracted-in schemes and occupational pensions schemes—would have a huge effect on his work. We expect the regulator's prime interface to be with scheme trustees or occasionally with the employer and the scheme professionals. That is why we do not seek to widen the provision in the way suggested.

§ Lord Skelmersdale
I think that is a pity. I shall not pursue the point, but we may well decide to return to the matter at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

The Deputy Chairman of Committees
I remind Members of the Committee that we did not meet yesterday; it was the day before yesterday.

§ Lord Skelmersdale
I have heard that that the regulator can use only the powers already in theory available to the trustees. If the trustees fail to extract the money, will not the regulator need extra powers? I am surprised that this clause, again unusually, is so mild in that respect.

§ Baroness Hollis of Heigham
This clause allows the regulator to stand in the shoes of the trustees in relation to occupational schemes and the members of personal pension schemes to enforce the debt due from the employer rather than just to punish him. The reason we need the power in this form is not so much to displace the trustees, although that may need to happen on occasion, but because at the moment OPRA lacks these powers.
OPRA's experience has shown that, unfortunately, some employers deduct contributions from employees' pay but do not forward them to the scheme. Even more commonly, employers do not forward their own contributions. This is a particular problem in personal pensions and defined contribution schemes where there has been no mechanism for ensuring that the employer pays what is owed unless individual employees are prepared to take their employer to court. Noble Lords will appreciate that individual employees are often reluctant to take legal action against their employers unless they are considering leaving their jobs.
In the year 2002–03, OPRA received over 8,000 reports of late payments and penalties were imposed on 37 employers who had not paid contributions or had paid them very late. However, as was highlighted by the National Audit Office report in October 2002, OPRA has no power to ensure that the contributions due are paid. OPRA can punish the employer, but cannot make good the problem. That is why the clause is drafted in this way.
The money is due to the scheme and in our view an employer should be required, if other methods have failed and the trustees have failed, to pay what is owed. This power helps to keep intact the pension promise which the employer makes to the employees. That is really very important. We are making good a problem that OPRA has recognised.
The noble Lord is absolutely right to point out that the regulator will be standing in the shoes of the trustees but, where trustees have failed or have been unable to rectify the problem, the regulator will now have the powers to do so. I hope that, with my explanation, the noble Lord will agree that the clause should stand part of the Bill.

§ Lord Skelmersdale
I understand all that, but my real question was: are the powers sufficient? As I read the clause, the regulator can do only what the trustees can do and have already failed to do, which is why they need to bring in the regulator in the first place. Does 184GC the regulator need extra powers? Again, if the noble Baroness would like to consider the point, I shall be happy with that.

§ Baroness Hollis of Heigham
I shall make a final point, one that I meant to make in my original remarks. Obviously it is the case that where you have decent, law-abiding, upright trustees, there may be an issue whereby we need to look at what powers by regulation may be required by the regulator. But the problem we are addressing is one that often arises in smaller companies, where the trustee is the employer himself. You are trying to ask the person whose default you are seeking to remedy to act against their own interest. That is why we need this power.
If we need to go beyond this point—and the noble Lord may well be right—after the Bill has received parliamentary consent, we shall discuss with industry the powers to be given by regulation. If the noble Lord is right and the powers here do need to be strengthened, I am sure that we shall take his point on board.
Clause 18 agreed to.

§ Baroness Hollis of Heigham
moved Amendments Nos. 49 to 52: After Clause 18, insert the following new clause—