HL Deb 16 March 2001 vol 623 cc1101-12

Lord McIntosh of Haringey rose to move, That the order laid before the House on 27th February be approved [9th Report from the Joint Committee].

The noble Lord said: My Lords, with the leave of the House, I should like to speak also to the Financial Services and Markets Act 2000 (Carrying on Regulated Activities by Way of Business) Order 2001 and the Financial Services and Markets Act 2000 (Exemption) Order 2001.

Those of us who carry the campaign medals from the Financial Services and Markets Bill 2000 will recall that, complicated though the primary legislation was, the regulations which were to follow the primary legislation threatened to be even more complicated. We now come to Parliament with the secondary legislation under the Financial Services and Markets Act.

The Financial Services and Markets Act 2000 provides a far-reaching overhaul of financial services regulation. It establishes the Financial Services Authority as a single statutory regulator of UK financial services. In place of nine regulators, there will be one. In place of eight dispute procedures, there will be one ombudsman. In place of five compensation schemes, there will be one. That will benefit both practitioners and consumers. The Financial Services and Markets Act was subject to a great deal of consultation and scrutiny both within Parliament and outside. I do not need to detain your Lordships with the history of that.

We are making good progress on the implementation of the Act. We are seeking Parliament's approval, including through this debate, of seven statutory instruments—the orders before the House are the first three—which will set the boundaries of the new framework for financial regulation. The instruments will, between them, define the extent of FSA regulation, the framework for the marketing of financial services and the provision of financial services by professional firms. We also expect to seek shortly Parliament's approval of a number of other statutory instruments. Those will complete legislation under the Act on market abuse, recognition requirements for clearing houses and investment exchanges and appointed representatives of authorised persons.

The Economic Secretary to the Treasury was able to announce on Wednesday the latest date on which the main provisions of the Act will come into force, a date known in financial services jargon as N2. In doing so, she took into account the need for firms and consumers to enjoy the benefits of the regulatory framework as soon as practicable, balanced against the need to give financial services firms a reasonable time to prepare between announcing a firm date and N2. She announced our aim that N2 be no later 'than the end of November this year. As soon as she is in a position to announce the actual day of N2, she will do so. I should make clear that this is not an aspiration or a working assumption. Firms should prepare for N2 on that basis.

The legislation for which we are seeking parliamentary approval will enable the FSA to finalise many of its rules and give financial services firms greater certainty about how the Financial Services and Markets Act will affect them. On the basis of our continuing to make progress, I understand that the FSA expects to be in a position to make the key provisions of its rule book no later than the end of July. I should add that while the target for N2 means that the main provisions of the Act will come into force no later than the end of November, there will he some variations to that.

In respect of mortgages, given that this is an activity which has not hitherto been subject to regulation., it is appropriate to give the FSA and mortgage lenders more time to prepare for regulation. We intend regulation of mortgages to begin nine months after N2. In respect of funeral plan contracts, we intend the relevant provisions to come into force on 1st January 2002. Deposit taking by credit unions will also be regulated for the first time under the Financial Services and Markets Act. That will take place from 1st July 2002.

Finally, on implementation, a number of the provisions of the Act will need to be commenced prior to N2. For example, the FSA itself will have to be established in order to make its rules. The Financial Services and Markets Act 'Tribunal will also need to be established in order to begin its work of determining cases arising, for example, from certain applications before N2 for authorisation after N2. The provisions to be commenced early will be set out in commencement orders in the usual way. Some provisions—the powers to make statutory instruments and interpretative provisions—have already been brought into force by the first commencement order.

I now turn to the orders which are the subject of this debate. It is no exaggeration to say that the regulated activities order is the most important piece of secondary legislation under the Financial Services and Markets Act. It defines the scope of what is to be regulated by the FSA. The regulated activities order was issued twice for public consultation: once in February 1999 and then again in October last year. The order sets out the activities and investments which will be subject to regulation by the FSA, and which are, under existing legislation, contained in different financial services, banking and insurance legislation. Having all the regulated activities specified in a single order will be one of the key benefits of the new framework and will be appreciated, in particular, by the estimated 665 firms which are currently subject to authorisation by more than one regulator.

The boundaries of FSA regulation are to be set by Treasury Ministers accountable to this House. The Act provides various accountability mechanisms for the FSA itself. But we should be clear that the scope of what the FSA regulates is a matter firmly reserved for Ministers. Moreover, if Ministers wish to extend the scope of FSA regulation where it had not hitherto applied, that requires, as with this debate, an affirmative resolution process with a debate and vote in both Houses of Parliament.

I turn now to the scope of regulation set out in the regulated activities order. It is fair to say that in nearly all cases the order brings about only small changes to the existing scope of regulation. Thus, for example, Article 25(2) of the order states: Making arrangements with a view to a person who participates in the arrangement buying, selling, or underwriting investments … (whether as principal or agent) is also a specified kind of activity".

This provision is substantially derived from paragraph 13(b) of Schedule 1 to the Financial Services Act 1986. But we have introduced a new exclusion for arranging deals in investments, where the arrangements merely provide the means where one party to a transaction is able to communicate with other such parties. This change, although highly technical and specific, is designed to ensure that information transmitters, such as telecommunications companies and Internet service providers will not be regarded wholly as arranging deals in investments. This change is not untypical of the adjustments we have made to many of the provisions of the regulated activities order compared with existing legislation.

Perhaps I may draw the attention of the House to areas of significant change in the regulated activities order. The order brings into the scope of FSA regulations for the first time mortgages, pre-paid funeral plans, stakeholder pension schemes and aspects of Lloyd's insurance. The grounds for bringing these activities into regulation vary for each activity, but in all cases it will, if necessary, enable a different balance between the interests of firms and consumers to be struck compared with the absence of regulation. And, if redress is necessary, regulation will provide easier means of redress for consumers.

We have also introduced a new risk management exclusion which is designed to replace the permitted person regime in the Financial Services Act. These new areas of regulation were of course subject to consultation with those affected. The regulated activities order will reduce the scope of regulation in other cases. These are in relation to, first, the issue of debt securities, where we have excluded from the scope of deposit taking sums received in consideration for the issue of debt securities over one year; where the securities have a maturity of less than one year, we have excluded from the scope of deposit taking such sums only where the securities are offered to professional investors and have a minimum denomination of £100,000. Secondly, the order will reduce the scope of the activity of arranging deals in investments, for the reasons that I have given previously. Thirdly, we have also reduced the scope of regulation in relation to vehicle breakdown insurance, where we have removed the requirement that such insurance be normally available throughout the mainland of Great Britain, for the exclusion from the activity of effecting and carrying out contracts of insurance to apply. We are satisfied that in those areas where the scope of regulation is being reduced, consumer protection will not be prejudiced.

I shall turn more briefly to the exemption order and the business order. In my view, the provisions of the regulated activities order, and of the business order and the exemption order, are compatible with the convention rights within the meaning of the Human Rights Act 1998. The exemption order, as its name suggests, exempts from the requirement for FSA authorisation, named persons in respect of classes of regulated activity or, in some cases, particular regulated activities. There are bodies for which authorisation by the FSA would be either inappropriate or unnecessary. In almost all cases, these are bodies which are carrying out some kind of public policy function such as the Bank of England or a tourist board. Alternative mechanisms exist, therefore, of ensuring that they undertake regulated activities in a way which does not damage the interests of consumers. Moreover, as public policy bodies, potential competition concerns from their exemption from FSA authorisation do not arise.

Our intention under the exemption order has been broadly to ensure that those persons who were exempt under previous legislation do not need to seek FSA authorisation. In a number of cases, however, it has not been necessary to provide a specific exemption where one had been provided previously. That is, first, because the test for whether a person is carrying on regulated activities in the first place, and hence might conceivably need an exemption, is that they do the activities by way of business. We have concluded that in a number of cases, for example, Church bodies, this is not the case.

Secondly, it makes no sense under a single regulator of financial services for persons to be authorised in respect of some activities and exempt in others. Under the new regime, a person's Part IV permission can simply be extended to take account of activities for which they were previously exempt. Having said that, we do not wish the provisions of the Act to apply to the activities of persons who will be authorised under the new regime, but who had an exemption for certain activities under previous legislation. This has been achieved via an exclusion in the regulated activities order.

Thirdly, some exemptions have been removed because they are no longer necessary. An example is that for nationalised industries accepting deposits from other nationalised industries. Lastly, some exemptions have been updated to reflect wider developments; for example, developments in the gas and electricity markets.

Finally, I turn to the business order. As I have already said, a person is carrying on regulated activities only if he does so by way of business. That term is not further defined in the Act and will have its usual meaning. But there are circumstances where, although a person might otherwise be regarded as carrying on activities by way of business for the purposes of FSA regulation, we wish to deem him not to be doing so. The converse also applies: there are circumstances in which somebody would usually be regarded as not carrying out an activity by way of business, but we wish to regard him as in fact doing so.

Existing legislation on banking, insurance and investment services each has slightly different business tests. We have therefore used the business order to, in effect, retain the business tests for predecessor legislation. This will make easier the transition to the new framework for all financial services firms as the business tests with which they are familiar will continue to apply.

I have been informed that the City Liaison Group has asked the Treasury to clarify a few technical points on the regulated activities order, and I shall ask Treasury officials to clarify those points in due course.

Finally, I should draw the attention of the House to one section of the business order which implements one of the recommendations by Paul Myners in his report to the Chancellor on institutional investment. The change will enable the trustees of an occupational pension scheme to invest in an authorised fund which invests in private equity without the trustees themselves having to be authorised. This change is fully in line with the Government's objective of encouraging greater investment in private equity. I commend the change, the business order, the regulated activities order and the exemption order to the House. I beg to move.

Moved, That the order laid before the House on 27th February be approved [9th Report from the Joint Committee].—(Lord McIntosh of Haringey. )

Lord Newby

My Lords, I am grateful to the Minister for his detailed explanation of the orders. Those of us who sat through the long discussions on the Bill find it fascinating to return to these issues.

I have only one substantive point to make on the orders. It relates to the question of mortgage intermediaries and mortgage advice. Noble Lords may recall that there was much discussion when the Bill was passing through the House about the whole question of bringing mortgages within the scope of the Bill and about the point at which that activity should be regulated. The problem at the moment is that neither mortgage intermediaries nor those giving advice on mortgages are to be regulated. We are in the interesting situation where the industry wants more rather than less regulation in this area; it wants these two categories of people to be brought within the scope of the legislation.

So far as concerns mortgage intermediaries, about half of all borrowers seek advice from intermediaries before approaching a particular lender. My understanding is that the FSA has suggested that one way forward would be to make a rule requiring lenders to take responsibility for ensuring that mortgage intermediaries comply with the FSA's rules for lenders on providing borrowers with pre-sale information. However, this proposal has met with widespread opposition from lenders and intermediaries alike, because it is really regulation by the back door. It would be costly and wasteful. The FSA believes that if there should be control over what information intermediaries provide, it should be in a position to regulate that process by authorising intermediaries directly.

The second, broader, issue concerns the fact that there is no provision for the regulation of mortgage advice. Again, the consultation has suggested fairly unanimously that this should be brought within the scope of the Act. My recollection is that when we were looking at these two different areas when the Bill was passing through the House, the strong advice that we had from the Treasury and the FSA in relation to mortgage advice was that it should not be brought into the scope of the Bill at that stage because it would place a considerable additional burden on the FSA in terms of the range of businesses that were being regulated and that the matter should be left for the time being and looked at later.

In view of the preponderance of advice and opinion within the mortgage industry that mortgage advice and mortgage intermediaries should be brought formally within the firm regulatory framework of the FSA, can the Minister say where discussions have got to on these issues and, secondly, whether, in the tight of the consultation, there will be a serious look at bringing these two areas of activity within the scope of the regulations?

11.15 a.m.

Lord Kingsland

My Lords, yesterday, in the 10th Standing Committee on Delegated Legislation in another place, a very full debate took place on these three orders between my honourable friend Mr Howard Flight and the Minister, Miss Melanie Johnson. In those circumstances, nothing would be gained by rehearsing what was said in every detail. That is, of course, on the assumption that the Minister's responses today will reflect those of his honourable friend in another place.

Lord McIntosh of Haringey

My Lords, the noble Lord, Lord Kingsland, has that assurance.

Lord Kingsland

My Lords, I had hoped that it was not an unreasonable assumption as only 24 hours have passed.

The Minister was kind enough to see me, together with Mr Charles Abrams, the distinguished financial securities lawyer, to discuss these orders some weeks ago. Although we were not as successful as we had hoped, I should like to thank the Minister and his officials for all the time that they took over our concerns.

I should also like to pause here, if I may, to pay a tribute to Mr Charles Abrams, who does not, at the moment, enjoy the best of health. His remarkable grasp of the Act has played a major part in shaping the Opposition's approach to it throughout its long passage through another place and through your Lordships' House. But I know that the Minister will agree that Mr Abrams' contribution has transcended matters of party politics. It is no exaggeration to say that he has made a major contribution to everyone's approach to the Bill, whether in government or opposition, whether in the City or the professions; and, in doing so, he has performed a significant act of public service.

I cannot let the orders go without saying some things about them. It is a sadness that your Lordships' House is unable to amend orders, especially when such orders will play a leading role in the future activity of the most successful sector of our economic life in the United Kingdom.

I wish to refer to four matters which are raised by the first order; that is the regulated activities order. The first concerns arranging deals in investments falling under Article 25(2) of the Financial Services Act. That article covers all arrangements made in order to enable participants to buy or sell investments. The scope of the "arranging deals in investments" category of regulated activity should, in our view, be much more restricted. Were I able to amend the order, I would suggest the following amendment: Making arrangements with a view to inviting, influencing or persuading someone to enter into a transaction under which a person who participates in the arrangements will buy, sell, subscribe for or underwrite investments falling within paragraph (1)(a), (b) or (c) (whether as a principal or an agent)". Secondly, I am still concerned with those parts of the order which deal with specific exemptions for professionals when providing professional services under Article 67. There is still no specific exemption for lawyers and accountants.

There is, indeed, now a more relaxed exemption than in the previous version of the order for "necessary activities", which applies if the activity is reasonably thought to be necessary. However, this still does not solve the problem where professional firms will not want to risk getting "reasonably thought to be necessary" wrong, and so commit a criminal offence. Moreover, the exemption is made worse because it applies only if no other activities carried on by the professional firm consist of other regulated activities; and this seemingly applies anywhere in the world, if my interpretation of Article 67(1)(a) is correct.

I therefore propose that Article 67(1) should be amended as follows: (1) There are excluded from Articles 21, 25(1) and (2) 40 and 53 any activity which (a) is carried on in the course of carrying on any profession or business which does not otherwise consist of carrying on regulated activities in the United Kingdom; and (b) either: (i) may reasonably be regarded as a necessary or desirable part of other services provided in the course of that profession or business; or (ii) relates only to negotiating or the legal or commercial consequences of an investment transaction or an agreement therefor". The exemption for arranging deals with or through FISMA-authorised firms may be helpful. However, in many other cases there will be no FISMA-authorised firm involved. This exemption cannot apply in these cases. It is therefore necessary to provide an exemption which is expressly directed to the position of professions.

The consultation document issued by the Treasury in February 1999, with the first draft of the regulated activities order, stated expressly in Section 3 that the Government wanted to avoid professionals seeking authorisation on a precautionary basis merely in order to ensure that, in advising their clients in a professional capacity, they did not commit a criminal offence. The Treasury indicated that the regulated activities order would therefore seek to define activities regulated under the Bill in a way which leaves as little room for doubt as possible, thereby minimising the number of firms which seek authorisation on a precautionary basis.

It is surely inappropriate, in any case, that firms which only provide legal or accountancy advice to corporations or private individuals, on transactions, or negotiations, should be regarded as providing a financial service. In our view, these are not investment activities at all; they are merely "professional activities connected with investments".

Thirdly, I turn to the signature of investment agreements. There should be an exemption from Article 21 (dealing with investments as agent) where a person merely signs an investment agreement on behalf of another person in circumstances where it is not itself a party and has no discretion as to the terms of that agreement. I am advised that the FSA regards this as constituting "dealing as an agent"; the person signing is binding the party to the agreement by signing for him and is, therefore, agreeing to do whatever it is that that party has to do "as agent". The person signing does not "agree to buy [or sell] as agent" anything; he merely agrees that the party to the agreement will buy or sell.

It would seem to us that the appropriate exemption in the order should read as follows: (1) There shall be excluded from Article 21 any transaction which is or is to be entered into by a person as agent only in that he signs or will sign an agreement for that transaction as signatory for one of the parties to that agreement at the direction of that party. (2) For the purposes of sub-paragraph (1) above, a person signs an agreement at the direction of a party only if the party has approved that agreement or an agreement in substantially the same form as that agreement". Fourthly, I turn to the definition of "shares". The definition in Article 76(1)(b) treats as "shares" interests in any unincorporated body constituted under the law of a country or territory outside the United Kingdom. Accordingly, the Netherlands, Antilles or Cayman Islands or indeed Channel Islands limited partnership will be treated as a company as well as a collective investment scheme.

When it comes to marketing, therefore, it will always be necessary to fall within exemptions from both the Public Offers of Securities Regulations 1995, which apply to "shares" within what would be Article 76(1)(b), and the restrictions on marketing collective investment schemes, under Section 238(1). As I understand it, this is because, if there is no exemption, both the Section 238 restrictions and the prospectus requirement under the POS regulations apply, whether or not the unincorporated body is open-ended. This contrasts with a corporate collective investment scheme—a body corporate is a collective investment scheme only if it is open-ended. If it is, the POS regulations do not apply to it. The definition should therefore be changed.

I should like to mention two further matters arising under this order, although I am still not quite sure, having read the proceedings in another place, what is the Government's position on them. The first of these concerns the definition of "close relatives" under Article 3(1).

The definition of "close relatives" in the exemptions ought to include trustees of trusts where the only beneficiaries are close relatives. This is especially important in relation to the exclusions for activities carried on in connection with a body corporate. Many family companies use trustees—for example, if a spouse is given only a life interest or any children are minors. Unless the definition of "close relatives" is extended in this way, the exclusions cannot be used.

The final area of uncertainty concerns the removal of the ISD passport for non-UK EEA banks. The regulations should reinstate the unilateral ISD passport which has been granted to non-UK EEA credit institutions—in other words, the passport similar to the passport granted by the investment services directive to non-bank investment firms which has been granted by the Treasury to credit institutions from the EEA which are not incorporated in the UK.

As I recall, when we asked for the reinstatement of the unilateral passport when the Bill was going through this House, the Government stated that the Treasury had never unilaterally granted any such passport. I have always been puzzled by that statement and respectfully disagree with it.

The Treasury has indeed granted this passport. The passport covers the ISD activities not covered by the second banking directive, especially arranging deals in the secondary market and receiving and transmitting orders. As I understand it, the FISMA does not continue this unilateral ISD passport and, consequently, will significantly prejudice incoming EEA banks. It will also be helpful to the United Kingdom to continue this passport because United Kingdom banks can similarly be benefited when they use their outgoing passport.

Finally—your Lordships will be relieved to hear—perhaps I may make one observation on the draft of the Carrying on Regulated Activities By Way of Business Order.

We, of course, support the proposed exemption of pension fund trustees from the need to be FISMA-authorised which is imposed by Article 4(1). The exemption appears in Article 4(1)(b) and applies even if decisions to invest in private equity funds within paragraph (6) are not taken by FSIMA-authorised or exempted firms or overseas persons. This exception o the general rule that the exemption applies only if all decisions on investments are taken by firms falling within these permitted categories reflects an important recommendation in the Myners report, as it removes a regulatory obstacle to venture capital investment by pension funds.

However, in our view, the exemption does not go far enough. All that it achieves is to ensure that I he actual decision can be taken by the pension fund trustees. They still need to be advised by one of these permitted persons. This means that the trustees still have to find a permitted person who knows about venture capital, become its client and, at least in the case of FISMA-authorised firms, go through a "know your customer" inquiry. Indeed, if the FSA conduct of business rules reflect the existing IMRO requirements in this regard, the FISMA-authorised firm has to treat the pension fund as a private client and comply with the suitability requirement. In our view, this is both cumbersome and expensive and still represents a significant regulatory obstacle. We recommend that the requirement in paragraph (6)(b) should be deleted.

We also think that the definition of "relevant investment" in paragraph 7 should be restricted. This is because "shares" include interest in non-UK collective investment schemes. Otherwise, the two-tier fund (where the body corporate itself invests in relevant investments; for example, where the body corporate is an investment trust or venture capital trust) becomes a three-tier fund, where the fund in the second tier is not restricted to private equity. If this amendment is not accepted, it would surely be appropriate to allow for these three-tier funds to be established through UK collective investment schemes as well.

I would, without in any way embellishing upon them, like to associate myself with the remarks of the noble Lord, Lord Newby, with respect to mortgage advisers and mortgage intermediaries.

11.45 a.m.

Lord McIntosh of Haringey

My Lords, I am grateful to both noble Lords for the care with which they have responded to these orders. I shall do my best to respond to the points that have been made.

I start with the issue of mortgage lenders. This was referred to mainly by the noble Lord, Lord Newby, but with the assent of the noble Lord, Lord Kingsland. The Treasury's consultation in 1999 showed that what prospective borrowers really need is clear and comparable information about the mortgages on offer. We decided that there was no need to regulate mortgage advice and that we did not need to regulate mortgage brokers, only mortgage lenders. Lenders should be more familiar with those who distribute their products. That has the advantage of reducing the work of the FSA to a reasonable level, allowing a slightly faster introduction than might otherwise be possible. Some 8,000 additional brokers would need to seek authorisation from the FSA as opposed to the 200 or so lenders.

The Government are committed to reviewing the operation of the Financial Services and Markets Act in the round two years after N2; that is, before the end of 2003, in response to the Cruickshank review. Experience in those two years could point to the need for less rather than more regulation in this area. However, I think it will be clear that we have not ruled out the possibility of extending regulation if that is necessary. We shall return to that issue in due course.

As to whether we should regulate advice, surely mortgages are not inherently complex. One borrows money against one's home and one pays off the loan over an agreed term. The original consultation showed that there was a lack of clarity and transparency over redemption penalties, for example. That was the main cause of consumer detriment. As regards mortgages, customers are not entrusting their own funds to financial firms; it is the other way round. We think that the review that I mentioned will deal with the issue which was raised.

The noble Lord, Lord Kingsland, made a number of points. I shall try to deal with them as best I can. He mentioned arranging deals in investments. It was proposed that we should include an exclusion from the activity of arranging deals in investments where the arrangements consist only of an activity which is not a regulated activity. But as the purpose of the regulated activities order is to specify regulated activities, it does not make sense to exclude activities which are not regulated activities. What we have done is to reduce the scope of the activity of arranging deals in investments by including a new exclusion from the activity where the arrangements merely provide the means by which one party to a transaction, or potential transaction, is able to communicate with other parties.

The noble Lord, Lord Kingsland, also referred to Article 67 on specific exclusions for professional firms. We have not included a specific exclusion from the activity of arranging deals in investments for professional firms because we doubt that merely preparing or negotiating legal documentation for a transaction would amount to arranging deals in investments. If the activities of a professional firm spill over to arranging deals in investments, the firm may be able to rely on the exclusion in Article 67 which will be available where, first, the activity is carried on in the course of a profession which does not otherwise consist of regulated activities and, secondly, may be reasonably regarded as a necessary part of other services provided in the course of that profession. In any case we have liberalised the exclusion in Article 67, which is based on paragraph 24 of Schedule 1 to the Financial Services Act 1986, by changing the wording from, is a necessary part of other services", to, may reasonably be regarded as a necessary part", to make it more useful to professional firms.

The fallback is that if a professional firm's activities do not fall within the exclusion in Article 67, it will be open to the firm to submit to the regime for professionals in Part XX of the Act. But, to give a specific exclusion for the activity of arranging deals in investments for professional firms would undermine the regime in Part XX without any of the checks and balances which are built into that regime.

I hope that my remarks will be less complex as regards signing an investment agreement. We do not agree that merely signing an agreement comprises dealing as an agent. We do not believe that that concern is well founded. I understand the concern about the definition of shares because of the scope of the Public Office of Securities Regulations of 1995. The right solution would seem to be to change the Public Office of Securities Regulations, not the regulated activities order. The definition of shares reflects that in the 1986 Financial Services Act, and the change proposed seems a rather odd way of dealing with the problem, if there is a problem, which could have a number of unintended consequences.

I turn to the definition of a close relative. We have already amended the exclusion in Article 70—articles carried on in connection with the sale of a body corporate—so that "close relative" includes trustees of trusts where beneficiaries are close relatives. It is not appropriate to amend the definition of close relative in the rest of the regulated activities order.

On the universal passport issue to cover ISD activities, this is a matter for regulations to be made under Schedule 3 to the Financial Services and Markets Act. I was interested in the remarks of the noble Lord, Lord Kingsland, about pension fund trustees. I referred to that in the closing minute of my introductory speech. It is a deliberate policy to require trustees to get advice from an authorised person. That in turn reflects requirements of the Pensions Act. Where there is more than one tier, each fund must have as its primary purpose investment in private equity. We have gone a long way in implementing Mr Myners' recommendations but we do not think that we should go the extra mile which the noble Lord, Lord Kingsland, proposes.

I hope that that deals with the issues raised in the debate. I commend the orders to the House.

On Question, Motion agreed to.

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