Employees from the Financial Conduct Authority and the Prudential Regulatory Authority have been seconded to The Pensions Regulator to help with work on the master trust authorisation regime.
Speaking at the Pensions and Lifetime Savings Association annual conference today, 18 October, Titcomb said the master trust authorisation regime opened for applications on the 1 October and “we were ready to receive applications”.
She said the regulator is now starting the authorisation process and that will then be followed, “which is something people haven’t entirely latched on to”, an ongoing supervisory regime for master trusts.
“It will also not surprise you to know, that as we are doing authorisation for the first time at TPR, we have been able to draw on the expertise of the FCA, and indeed the PRA, both of whom have seconded staff to us to work on authorisation, we’re in good shape for that,” she noted.
She said that the regulator has constantly drawn on the FCA and PRA’s fit and proper test, as she said “what is the point of us reinventing the wheel”.
Speaking on master trusts that exit the market, she said there is a rule that between the legislation being passed and when schemes have to get the authorisation, “you lose about 25 per cent of your market”.
“We will see some fallout, we have already seen some fallout in the master trust market. There are provisions in place to make sure that is done in an orderly fashion. For example, from October 2016, master trusts haven’t been able to increase the charges to members in order to cover the cost of going out of business, that’s just not allowed.
“The decision to wind-up is what’s called a triggering event, that triggers our involvement, and we are working with master trusts who choose to exit the market, to ensure that they do so in an orderly fashion, we will continue to do that, and to work with the industry as well, to ensure that the people that have saved into those master trusts are looked after, and that a service is then available to those employers.”