I thank the noble Lord for his offer to write to me on the matter. Maybe having it in writing will be better, because the efficiency or ability of any requirements under the Bill will be heavily influenced by the extent to which they can retrospectively apply to existing pension contacts. However, if the noble Lord is going to write to me on that point, I will also deal with other matters.
We need to get a sense of perspective on this. Auto-enrolment potentially affects 20 million people in this country. The whole of the private sector workforce, when it is engaged in employment above a certain income level, is a huge community of people; it is a great statement of trust between the working population and the Government. People are saying that they accept the argument that the people must take responsibility for providing for our income in old age, but they have the right of a reciprocal entitlement to know that the Government are doing what is necessary to ensure that those who have discretion over their savings and are managing them do so in a way which is in their interests and to high standards of governance.
I am afraid that I do not buy “balance of interests” at all on this issue. If you come into the market to provide a pension product under auto-enrolment, you cannot sell or manage a product that does not meet the needs of the savers. You would not say, “Well, I will leave the brakes off a car in the interests of not making the employees redundant”. You have to sell a product that meets the interests of the members and is designed and managed with the interests of the saver at heart.
The independent governance bodies, or committees, are very weak as they are proposed. There are lots of people commentating to that effect. As proposed, they have fewer new powers—or no powers—for resources, for information, or for appointment of members to the board. It is in the gift of the companies themselves. As currently advised, they have no powers or capacity to address conflicts of interest. I know that this issue of governance is a work in progress. The Government are considering the matter and are due to report further. The OFT says that it has more work to do on its recommendations. The Law Commission is looking into this.
What cannot be dodged at all, in my view, is that any governance structure, requirements or arrangements for a private pension system that does not put the identification and resolution of conflicts of interests in the interests of the saver at its heart will be flawed. Successive Governments will keep picking up the consequences of that. There must be some—cross-party or whatever—biting on the principle that if you give the market a huge demand side that it could never have created itself under a voluntary system, that carries with it the requirement for a high standard of governance. The Government must say that those who enter the market under auto-enrolment to provide
pension products must operate on the basis that any conflicts of interest are resolved in favour of the beneficiary or saver.
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I know that there is a general enabling clause in Schedule 17, but this issue is so powerful and central that the regulations should state that they need to provide for requirements in relation to the identification, avoidance and management of conflicts of duty and interest. I have not sought to go into the detail of how that is done in my amendment, only to say that it must be done. Having made my point, I beg leave to withdraw my amendment.