After making deferential remarks to the noble Lord, Lord Browne, I have to make even more deferential ones to the noble Lord, Lord Lawson. The direct response is that I am not privy to the content of that statement, confirmation of which has been received only recently. However, addressing the principal agent problem which he so eloquently outlined for us was at the heart of the consultation process which was launched back in October, and was at the heart of what the OFT was driving at in its review. Therefore, in responding to that consultation, I reassure my noble friend that he will find—I hope—that this offers the reassurances he seeks. If not, he is at liberty to bring this matter back on Report, should he choose not to press his amendment at this stage.
On the definition of charges and transaction costs, Schedule 17 gives the Secretary of State the power to restrict administration charges by regulation. In the consultation we proposed specifying a broad definition of charges to encompass any expense that does not result in the provision of pension benefits for a member. We also asked for views on whether transaction costs should be included within a charge cap. Any charges that are restricted—even those under a possible cap—will have to be defined in regulations. These regulations will, of course, be subject to public consultation and we have accepted the DPRRC’s recommendation that these regulations be subject to the affirmative procedure on first use. Government Amendment 70 will achieve this.
With regard to the noble Baroness’s Amendment 62H on the Henry VIII power in Schedule 17, we have noted the comments and recommendations put forward by the DPRRC. However, we believe that it is vital that the Government’s ability to regulate effectively in this area is not inadvertently undermined by future legislation that could not have been foreseen. We are back to an earlier point.
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I turn to the issue of disclosure of pension scheme charges and other costs, the subject of the amendment and my noble friend Lord Lawson’s amendments. As I have said, the Government share the concerns of the OFT that a lack of transparency can hinder consumers’ ability to compare schemes. As the right reverend Prelate the Bishop of Chester said, while there is also concern about the correct operation and transparency of scheme, there is a greater concern for us in our cross-party consensus: lack of knowledge or understanding may deter people from making the very
savings in their pension schemes that they so desperately need to secure a future that they and their families desire.
That is why we have consulted on a proposal to regulate, under existing powers in Section 113 of the Pension Schemes Act 1993, for greater transparency of pension scheme charges. These powers could allow us to mandate disclosure to both members and employers, and we asked for views on these approaches. My noble friend Lord Lawson’s amendment sets out a significant number of specific charges to be disclosed. I thank my noble friend for his amendment and contribution, and will ensure that they are considered as part of the response to the consultation. His amendment illustrates the complexity of charging structures and definitions—a point illustrated also by the number of, and level of detail in, the responses to our consultation. Given that these charging structures may change over time, we are not minded to constrain the Government’s freedom of action to respond to these changes by putting such specific details in primary legislation, hence the need for Henry VIII powers. I should add that we have been clear in our consultation that any requirement to disclose information must result in that disclosure being meaningful, relevant and accessible—not buried on page 12 in the fine print of a document or policy, as might have been the case in the past—to those who are making decisions about pension saving. That includes employers and scheme trustees as well as individual savers. I realise that I have been unable to provide specifics on how the powers in Schedule 17 and Section 113 of the Pension Schemes Act 1993 will be used in respect of restricting charges or requiring disclosure. We are still considering responses to the consultation and will make an announcement about that this week.
My noble friend Lord German asked a specific question to which I will try to respond. He asked whether the Government will make a stewardship code mandatory. The code sets out the best practice for institutional investors. The FCA already requires UK asset managers to report on whether they apply the code. We can write to the noble Lord with an update from the FCA on whether it has plans to make this mandatory. The consultation seeks views only on pension scheme governance at this stage. I hope that that will help to reassure.
However, I hope that I have been able to offer some further reassurance that the powers in the Bill and previous Acts are sufficient to allow this Government to take decisive action on the breadth of charging structures in operation, and that the public, stakeholders and, of course, noble Lords will have ample opportunity to scrutinise the details in secondary legislation. With those reassurances, I ask the noble Lord and my noble friend to withdraw or not move their amendments.