Derek McDowell (Labour)

The Minister will have to help me with this section. This is the section that essentially deals with the business of segregated liability. My understanding is that it does not apply retrospectively; it will only apply in so far as sub-funds are created going forward or if a management company agrees to do that.

I appreciate that this section is intended to encourage speculative investment but is there a danger in creating the possibility for a fund to hive off its most high-risk investment where the risk of insolvency is greatest, which is what we are principally concerned about, and where there is, in effect, no recourse to the rest of the assets of the fund for an investor if that sub-fund becomes insolvent? I can almost anticipate the Minister of State's response. He will say that if somebody is investing in something that is high risk, it is probably no harm that everybody else is to be segregated from them. Nonetheless, there should be a warning with this, so to speak, in that the Minister of State is telling people that if they go down this road there is a far greater risk that that particular sub-fund will become insolvent at some time in the future, which is tough. Am I correct in my understanding of the purpose of the section?