PLSA AC 2021: MNTs have 'nothing to fear from criminal sanctions' - TPR

The Pensions Regulator (TPR) has reassured the industry that trustees that "take good advice and pay good attention" in making decisions on behalf of pension savers have “nothing to fear from the criminal sanctions” recently introduced.

Speaking at the Pensions and Lifetime Savings Association (PLSA) Annual Conference 2021, TPR chair, Sarah Smart, emphasised that looking after people’s money is “a really important job and comes with responsibilities” that member-nominated trustees (MNTs) need to be aware of.

She said: “Member trustees need to be cognisant of the fact that they're trying really important job which has high expectations on them, but they should be supported in doing that.

“First of all, it should be explained to them exactly what the job is that they're volunteering for taking on, they should be supported in their training and education, induction, and that continues all the way through that they hold that job, and they should receive good advice and be well supported on making decisions.

“Trustees that understand what they're supposed to be doing, take good advice, pay good attention and make decisions on behalf of the savers, have nothing to fear from the criminal sanctions that that we as a regulator have.

“The MNTs who I've worked with have always put so much heart and effort into everything that they do, and been well guided and well supported.

“I think for them this isn't a concern, because it's something that that really doesn't reach their radar, because they’re not trying to use that position to the detriment of savers, which is what the criminal powers are designed for.”

Responding to this, session chair and outgoing PLSA chair, Richard Butcher, noted that the sanctions were “not that specific”, querying why TPR hasn’t provided more comprehensive guidance on it intends to implement the new criminal powers.

“One thing we've really tried to avoid is unintended consequences, and we have a system in the UK, our regulatory and legislative system, that's strongly based on common law it's not prescriptive, it's not definitive, and that allows for the use of judgement,” Smart responded.

Smart also explained that if a more prescriptive system was taken, it was “probably likely” that at some point in the future a perfectly legitimate commercial situation could arise where companies found limited in fear of the powers.

“[This] is an unintended consequence that we absolutely do not want to fall prey to,” she said, noting that "we all live with this uncertainty every day" in relation to offences such as reckless driving or driving without due care and attention.

Smart continued: “We all drive around having faith in the system that if we for some reason have to drive on the other side of the road or something like that, the police would understand that the rationale for us doing that and not come down on us like a tonne of bricks.

“Overall, we understand that the system is flexible, we understand that there's a danger there that we could be we could fall prey to that offence or could be charged with that, but we have faith in the system that it will be applied appropriately.

“So that's a system that that we that the industry and trustees need to live in as well.

“I understand that trust is an important part of the relationship between the regulator and the industry and it's a really important factor in part of a healthy well-functioning regulatory environment.

"We need to earn the trust and continue to earn the trust of the industry through our behaviour, our decisions, and being transparent about how we make those decisions.

“So that's really key for me as well in the regulatory activity that we undertake, and how we engage with the industry in terms of explaining the decisions we're making.”

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