HL Deb 12 July 1995 vol 565 cc1697-8

51 Clause 30, page 18, line 11, leave out from 'the' to 'under' in line 12 and insert 'function has been delegated'.

52 Page 18, leave out line 14.

53 Clause 31, page 18, line 29, leave out from beginning to 'except' in line 33 and insert:

'(2) Any discretion of the trustees of a trust scheme to make any decision about investments—

  1. (a) may be delegated by or on behalf of the trustees to a fund manager to whom subsection (3) applies to be exercised in accordance with section 33, but
  2. (b) may not otherwise be delegated'.

54 Page 18, line 44, at end insert 'or the person who made the delegation on their behalf has taken all such steps as are reasonable to satisfy himself'.

55 Page 18, line 45, leave out 'he' and insert 'the fund manager'.

56 Clause 31, Page 19, line 3, leave out subsection (5) and insert:

'(5) Subject to any restriction imposed by a trust scheme—

  1. (a) the trustees may authorise two or more of their number to exercise on their behalf any discretion to make any decision about investments, and
  2. (b) any such discretion may, where giving effect to the decision would not constitute carrying on investment business in the United Kingdom (within the meaning of the Financial Services Act 1986), be delegated by or on behalf of the trustees to a fund manager to whom subsection (3) does not apply to be exercised in accordance with section 33;

but in either case the trustees are liable for any acts or defaults in the exercise of the discretion if they would be so liable if they were the acts or defaults of the trustees as a whole.

() Section 30 does not prevent the exclusion or restriction of any liability of the trustees of a trust scheme for the acts or defaults of a fund manager in the exercise of a discretion delegated to him under subsection (5) (b) where the trustees have taken all such steps as are reasonable to satisfy themselves, or the person who made the delegation on their behalf has taken all such steps as are reasonable to satisfy himself—

  1. (a) that the fund manager has the appropriate knowledge and experience for managing the investments of the scheme, and
  2. (b) that he is carrying out his work competently and complying with section 33; and subsection (2) of section 30 applies for the purposes of this subsection as it applies for the purposes of that section.'.

57 Clause 32, page 19, line 34, at end insert:

'() Neither the trust scheme nor the statement may impose restrictions (however expressed) on any power to make investments by reference to the consent of the employer.'.

58 Clause 33, page 20, line 9, leave out 'they have delegated any discretion' and insert 'any discretion has been delegated'.

59 Page 20, line 28, leave out 'fund manager' and insert 'the fund manager to whom any discretion has been delegated under section 31'.

60 Page 20, line 32, leave out paragraph (a) and insert:

  1. '(a) where giving the advice constitutes carrying on investment business in the United Kingdom (within the meaning of the Financial Services Act 1986), advice—
    1. (i) given by a person authorised under Chapter III of Part I of that Act,
    2. (ii) given by a person exempted under Chapter IV of that Part who, in giving the advice, is acting in the course of the business in respect of which he is exempt,
    3. (iii) given by a person where, by virtue of paragraph 27 of Schedule 1 to that Act, paragraph 15 of that Schedule does not apply to giving the advice, or
    4. (iv) given by a person who, by virtue of regulation 5 of the Banking Coordination (Second Council Directive) Regulations 1992, may give the advice though not authorised as mentioned in sub-paragraph (i) above'.

Lord Mackay of Ardbrecknish

My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 51 to 60 en bloc. I wish to speak also to Amendments Nos. 75, 78, 81, 83 and 84. We now move on to amendments covering investments.

When we considered Clauses 30 to 33, a number of noble Lords expressed concern that they did not provide trustees with sufficiently wide powers to delegate their investment functions and therefore to administer their pension funds effectively. There was also concern that it could result in trustees being less willing to make investments, such as in property, which fall outside the scope of the Financial Services Act. I can recall the noble Lord, Lord Ezra, being very involved in the matter, as well as my noble friend Lord Buckinghamshire.

I then promised your Lordships that we would look carefully at the issues and would introduce suitable amendments as necessary. The outcome is Amendments Nos. 53 to 56. They will enable trustees to continue to enjoy the benefits associated with wider powers of delegation, such as greater operational flexibility and reduced administration and operational costs. We have also introduced a number of consequential amendments.

Amendment No. 56 will enable trustees to continue to benefit from exemptions from liability, when they invest in areas outside the scope of the Financial Services Act, provided that proper care is taken in appointing and monitoring those managers. The group of amendments, Amendments Nos. 53 to 56, I believe meet the concerns which were expressed when we considered matters during our discussions on the Bill. Amendment No. 57 is intended to make it absolutely clear that Clause 32 makes the trustees responsible for deciding investment policy after taking appropriate professional advice and fully consulting the employer. That is in line with recommendation 46 of the Pension Law Review Committee.

I hope that your Lordships will agree that we have taken full account of the debates which we had at an earlier stage on these important issues. I beg to move.

Moved, That the House do agree with the Commons in their Amendments Nos. 51 to 60.—(Lord Mackay of Ardbrecknish.)

On Question, Motion agreed to.