Managing conflicts of interest among trustees is one of the key areas to get right, The Pensions Regulator has said.

Speaking at the Pensions Age Spring Conference, TPR’s head of policy Fiona Frobisher said most of the problems that the regulator sees in cases are due to conflicts of interest and how they are managed.

Frobisher made the comments when talking about the regulator’s 21st Century Trustee campaign, which has a focus on good governance.

“Governance is notoriously hard to describe, you know what good governance is when you see it but when you try to break it down into a series of processes it is very difficult,” she said.

She noted that if you have a scheme that has engaged, diverse boards that have good advice and consider things properly, then you have probably got good governance. Speaking about the trustee delegates at the conference, she said she is not worried about them, as they are clearly engaged.

“What we are trying to do is make our expectations clearer, we are in the middle of rolling out a campaign we call 21st century trustee, which is breaking down different components of governance and provides some clear expectations, and some tools and examples that can show you what good governance in practice in those areas looks like,” Frobisher said.

She added that the next one will be published in May, which will be on managing risks, followed in June by one on managing conflicts

“Most of the problems that we see in cases, when we get down to the bottom of it, are conflicts of interest and how that’s being managed, so I think that’s a really key area to get right,” she said.

Frobisher also stressed that TPR is “not a compliance based regulator” and instead they look to understand why people are not complying.

“We have just finished a thematic review on value for members, which we are hoping to publish the outcomes on in summer. What we found there, and also with surveys we’ve done alongside the 21st Century Trustee campaign…where trustees are already engaged, they are more likely to engage with new material, and more likely to do what we want them to do.”

However, she said there is a subset of schemes, in small to micro, that don’t say that they don’t want to comply, or that they don’t have the resources, or they don’t know, but that they don’t think it applies to them. “It is a challenge for us as a regulator, because we have said we don’t see any reason that any member should be in a scheme that is governed less than well.” People have been ticking boxes that say they’ve done value for money exercises but they actually haven’t.

She said this raises questions for the scheme on whether the right thing is to get a professional trustee or consolidate into another scheme. In general, Frobisher said schemes with a professional trustee are better governed but the regulator realises that not all professional trustees are of the same standard.

Therefore, the regulator has encouraged a working group to get together to set standard for trustees and create an accreditation for professional trustees.

In addition, Frobisher listed TPR’s key areas of focus, which will be published in its corporate plan due next week. These are: expanding regulatory approaches, good trusteeship, DB schemes, master trusts schemes, auto-enrolment and Brexit.

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