My Lords, I am grateful to my noble friend Lady Noakes for tabling these amendments to Clause 107 and for the helpful conversations that we have had about them in recent days.
I start by saying that the Government understand the genuine concerns that have been raised during Committee and by my noble friend through these amendments. The first point that I would like to make —I think that it is necessary for me to make it—is that, in introducing the new criminal offences, the aim is to target individuals who intentionally or knowingly mishandle pension schemes or endanger workers’ pensions by behaviours such as chronic mismanagement of a business or avoiding pension liabilities. It is not the aim to frustrate legitimate business activities where they are conducted in good faith.
The key point is the one that I made in Committee: that it is an offence only if the person intended to harm the scheme or should have known that the conduct would have that effect and they have no reasonable excuse for their actions. The decision on whether a person does or does not have a reasonable excuse and ultimately did or did not commit an offence in a particular case is a matter for the courts. However, in coming to such a verdict, the courts will have paid due regard to all the circumstances in the individual case in question. That, of course, includes coming to a view on whether the person’s excuse for acting in that way was a reasonable one. The burden of proof on that question falls on the Pensions Regulator. In other words, the Pensions Regulator would need to prove that the actions of the individual were unreasonable.
The other dimension of the issue is that it is important that, where the elements of an offence are met, no matter who has committed it, the regulator should be able to respond appropriately. Any restriction of the persons potentially in scope would create a loophole for those people to act in such a way.
Having said all that, we are aware of the concerns raised by industry and by noble Lords. To address those concerns, I draw the House’s attention to the general prosecution policy which the regulator already publishes and which sets out the matters that it considers when using its prosecution powers.
My noble friend mentioned the regulator’s guidance. The regulator has stated that it will also issue further specific guidance explaining its approach to prosecuting the new offences under Part 3. Before it does so, the regulator will consult the industry on the contents of the guidance for the new offences, and it expects to publish this guidance prior to the commencement of these provisions.
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My noble friend asked why we are not defining “reasonable excuse” in the Bill but leaving it to the regulator. I come back to the point that what is reasonable in a set of circumstances will be dependent on the individual facts of the case. It is therefore a difficult thing to define but, on a broader point, it is obvious that no government policy should be immune from events. The Government accept that case law develops and it is for this reason that they keep all policies under review to ensure that they continue to meet their intended objectives. I hope from what I
have said that my noble friend will be confident that the regulator is well seized of the issues that she has justifiably raised and that there will be a process to ensure that its guidance is refined and clarified.
It is clear that the majority of those involved with pension schemes want to do right by the members. However, I hope no one would disagree with the proposition that there should be sufficient safeguards to protect members’ pensions from the minority who are willing to put them at risk. If the scope of the offences as introduced in Clause 107 were to be narrowed, then the deterrent and the safeguards provided by the offences would, without a shadow of a doubt, be weakened. With that in mind, and in coming back again to the point I made a moment ago that this is in no way about trying to frustrate legitimate business activities conducted in good faith, I would hope that my noble friend feels sufficiently reassured to withdraw her amendment.