COMMONS AMENDMENT (Hansard, 23 July 1973)

§ THE EARL OF LIMERICK
My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 24. This Amendment permits assets technically maintained in the United Kingdom not to be accepted as such for the purposes of a localisation requirement under the clause. These assets will not necessarily be of a dubious nature, or be improper in any way. There may, however, be technical difficulties—for example, in relation to the monitoring of the value of the assets or as to the risk of their being realised abroad in spite of the share register being kept in this country. This is quite apart from the application of the valuation regulations to assets required to the maintained here, which is provided for in subsection (4), or the possibility of requiring, under Clause 14, the realisation of inherently unsuitable assets. It was thought nevertheless that the Amendment represented a useful additional provision to ensure that the maintenance of assets here, where considered necessary, provides effective security for U.K. policy holders. I beg to move.

THE EARL OF SELKIRK
My Lords, I am not certain what is the effect of this Amendment. The noble Earl gave the impression that it was on the whole restrictive. I asked the noble and learned Lord the Lord Chancellor at an earlier stage whether it was the policy to encourage and support international rein- 1576 surance. I do not know whether this Amendment is intended to do that or not. I should rather like to know whether it is. There are two sides to it; one is the freedom of the operators in this country, the other is the confidence of their clients overseas that they will in fact be free and able to do this. I was not certain what the effect of this Amendment would be: whether it would be additionally restrictive, or whether it would allow greater freedom in operating the international market.

§ THE EARL OF LIMERICK
My Lords, the Amendment is intended to safeguard the position of United Kingdom policy holders. The powers in Clause 15 would be imposed only on the fulfilment of preconditions in Clause 12 in a specific case where it seemed necessary, in pursuance of the protection of the policy holder, to require localisation of assets. The effect of this Amendment is that if there are assets about which there is doubt as to whether they could be effectively realised in the event of need of cover of United Kingdom liabilities, there should be a discretion to the Secretary of State not to reckon those assets about which there was doubt in calculating the cover. This is the sole effect of the Amendment.

§ LORD DIAMOND
My Lords, it is still not absolutely clear. I thought that the purpose was the purpose that the noble Earl has just described; namely, to give discretion. But Clause 15(2) says: The Secretary of State may direct that … assets … shall be treated as assets … If he does not want to direct that they shall be so treated, he is not compelled to do so. It says that he "may" direct. If he is not compelled to, then they are not treated as assets, so I did not follow why it was necessary to give him power to say that they are not treated as assets.

§ THE EARL OF LIMERICK
My Lords, if, with the leave of the House, I may add a word, this is the converse case. The words the noble Lord, Lord Diamond, has read give the Secretary of State a discretion to declare that assets which are not, prima facie, United Kingdom assets may be deemed to be such. The effect of the Amendment is to provide for the converse case where, for the protection of the policy holders, he would wish to deem that assets which are prima facie United 1577 Kingdom assets should be deemed not to be such.