My Lords, I refer to my entry in the register of interests and shall speak to Amendments 19 to 21, which are grouped with those of the noble Baroness, Lady Bowles. My amendments are also in the name of my noble friend Lady Noakes, who sadly cannot be in her place today. We are concerned that the powers in Clause 107 may be drawn too widely. This is a concern shared by a number of those involved in the pensions sector—indeed, it was touched on by the noble Baroness, Lady Drake, a great expert in pensions matters, at Second Reading.
In the same debate my noble friend the Minister helpfully said that the intention of the clause was,
“to punish those who wilfully or recklessly harm their pension scheme”.—[Official Report, 28/1/20; col. 1353.]
In the light of that, it seems that the criminal offence is really aimed at parties whose conduct is extreme and lies outside the range of ordinary reasonable conduct. If so, we believe that the thought could be captured better by applying the offence only where,
“no reasonable person having regard to all of their duties and all relevant circumstances”,
would have acted as they did. The change from “reasonable excuse” to “no reasonable person”, as in Amendment 19, may not sound like much of a change; however, I assure noble Lords that it is important. I am advised that a substantial body of case law makes it clear that the two are very different. The former potentially creates a fine objective judgment, while the latter recognises that there is a range of conduct that can be seen as reasonable. Our Amendment 20 proposes for consideration today a list of factors that could be taken into account by the courts.
Finally, Amendment 21 proposes an exemption, drawing on an idea in the Pensions Act 2004. It would provide a system of binding comfort that could be given by the regulator or the Pension Protection Fund. Given the gravity of the criminal offences those involved in the pension world will potentially face as a result of the Bill, there seems to be a strong case for examining this. We want good, honest people to be involved in the sector and not deterred from any involvement. These amendments deal with new Section 58A of the Pensions Act 2004, but obviously if the argument were accepted by the Government, a similar change would be needed to new Section 58B.
In responding to these amendments, would the Minister —I think it will be the deputy Leader—give more detail and further examples of the harms we are trying to remedy in this part of the Bill? Much mention was made at Second Reading of BHS and Carillion, but these companies had unique factors that went way beyond pensions. The impact assessment assumes up to five cases every year. Is there other evidence in recent years that justifies criminal penalties and these estimates?
In closing, I shall make a wider point. We need to get this legislation right, and we have been trying to do that today, because the costs of getting it wrong, and the inevitable legal costs, will fall on pension schemes and therefore leave less for the very pensioners we are trying to help with the Bill. The new criminal offences appear to cover not only the employer but trustees, advisers, third parties and possibly the regulator. They could embrace routine debt funding necessary for a viable business, or changes to investment strategy designed by trustees to improve their fund. The perverse effect of getting the arrangements wrong—this is a theme I always return to—could be cost and delay, which might be problematic in a tight financial situation and push more businesses into the Pension Protection Fund, which is exactly what we all want to avoid. It could also deter trustees from taking on the responsibility for pension funds. My noble friend Lord Eccles, who I am sorry to see is not in his place, made this point in relation to the wider regulation-making power in Clause 51, although I very much understand the difficulties that my noble friend faces in this area.
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