My Lords, this important group of amendments deals with the definitions of new criminal offences and new regulatory fines, and with the defences to the criminal offences. I will also speak to my Amendments 18 and 22 as well as to Amendments 23 to 26 in the name of the noble Lord, Lord Hutton.
Amendments 17 and 22 are probing amendments. They would require that, for the criminal offences of avoidance of employer debt and risking accrued scheme benefits, the person has to have behaved wilfully, recklessly or unscrupulously. I want to say a few words about each of those terms, which is where the probing comes in.
I do not think that “wilfully” changes much in the sense of the clauses because later, in subsection (2)(b) of the respective new sections, it is stated that the person intended the actual course of conduct to have such an effect. It could be argued that the wording of the subsections further highlights the necessity for a greater understanding of the consequences but, in my view, the insertion of “wilfully” would make those subsections redundant. My Amendment 18 and Amendment 24, tabled by the noble Lord, Lord Hutton—to which I have put my name—would delete those subsections.
It gets a little more complicated when it comes to considering “recklessly” but it is important to consider that term because, as several noble Lords pointed out at Second Reading, the Government consulted on “wilfully” and “recklessly”. As I see it, “recklessly” does not require the same degree of intent as to outcome, so it broadens the scope. It implies a lack of due diligence or a high degree of negligence. One could perhaps express it almost as wilfully negligent—that is, not bothering to have proper checks in place and caring even less.
These are egregious matters we are considering, when pensions are put at risk either deliberately, without caring or for ulterior motives. To my mind, it would be unthinkable to allow unscrupulous individuals to get off the hook of criminal charges with the defence of “I didn’t know” because they had not made, and had no intention of making, the right kind of checks. “Recklessly” is not the same as “accidentally” or “incidentally”; “recklessly” is “I don’t care” and it should be covered. It should not require that the precise end effect was intended, which is why both
subsections (2)(b) in the offences, which say that the person intended the actual course of conduct to have such an effect, need to be deleted because they would negate recklessness as an offence.
Of course, having appropriate checks and procedures in place would be an obvious defence, just as they are in the various “failure to prevent” types of offences that have come into being, such as for bribery and money laundering.
Now I come to probing the third term: “unscrupulously”. This may not be a normal legal term, but everyone knows what it means. It is used in describing the objectives of those whom it is wished to catch. It is used about the new offences—starting at the bottom of page 7 of the Explanatory Notes, which state:
“They will provide additional deterrents for unscrupulous behaviours and will enable the Regulator to punish abuse and wrongdoing within the occupational pensions industry appropriately.”
That is exactly what we want to be able to do: punish unscrupulous behaviours.
Compared with some of our Commonwealth colleagues, we in this country are rather a soft touch. Australia has an offence of unconscionable conduct in commerce. It works under common law and shows that expressions describing bad behaviour do not need to be shunned in legislation. Yes, it is a catch-all phrase, but we should be starting to give it serious thought when it accurately describes the underlying behaviour.
As a little thought experiment, what happens if we apply the three words “wilfully”, “recklessly” and “unscrupulously” to driving fast in a 30mph zone? What would we get? “Wilfully” means that there was an intention to drive faster. “Recklessly” might mean not bothering to look or have regard to surroundings or missing the sign. What might be “unscrupulous”? I have had some fun thinking about this. Here are a few possibilities: blanking out your number plate with a fancy gizmo or having false number plates; getting a friend to remove the 30mph sign; or perhaps making someone else the fall guy, saying that you were not the one driving. These may be wilful acts but while it is questionable whether they are specifically wilful at the time of the actual offence or what the precise intended effect was, they are certainly unscrupulous.
I turn briefly to the amendments in the name of the noble Lord, Lord Hutton. I apologise for going ahead of the mover but there are words in common. In his amendments, “wilfully” and “recklessly” are used in a slightly different place but what I have said about their meaning also applies. There is also the consequence of needing to delete the subsection reciting intent.
Amendments 23 and 25 are applied to deal with the criminal offence and civil fine relating to putting accrued scheme benefits at risk. The wording
“detrimentally affects in a material way”
appears and has caused some concerns, which were referenced at Second Reading. I think that the positioning of the wording works well and support the addition of those words to the fine offence. Obviously, it is possible to merge the noble Lord’s proposal and my own with regard to the criminal offence of risking the accrued scheme benefits.
More broadly, it seems that “wilfully” or “recklessly” could be usefully incorporated into the financial penalty on avoidance of employer debt, so that it was in all four of the new offences, including the two criminal ones and the new fines. Then there would be no playing off about different meanings. But I will listen carefully to the Committee, particularly to see whether the noble Lord, Lord Hutton, has a different nuance to mine.
The other amendments in this group, tabled by the noble Baronesses, Lady Noakes, Lady Neville-Rolfe and Lady Sherlock, relate to defences and call for guidance. I sympathise with the general intent but have some reservations; however, I will speak to them later when we have heard from the movers, as their wording is not interconnected like my amendments and those of the noble Lord, Lord Hutton. I beg to move.