- Pensions Regulator consults on updated enforcement and prosecution policy
- Queen’s Speech reveals little of substance for pensions
Pensions Regulator consults on updated enforcement and prosecution policy
The Pensions Regulator has published for consultation a “new, consolidated and simpler” draft enforcement policy and an updated prosecution policy to help those facing or affected by enforcement action understand the Regulator’s approach.
The Regulator says that the enforcement policy consolidates previous policies for DB, hybrid, public sector and DC pension schemes and that both policies have been updated to include the new Pension Schemes Act 2021 powers granted to the Regulator and to reflect its experience from using existing enforcement powers.
Whilst this is undoubtedly the case, there appears to be little that is particularly noteworthy in either of the policies. We note two aspects:
- The enforcement policy has an interesting section on outcomes, where the Regulator states that it is looking at prevention, remedy, restoration and deterrence as outcomes. One potentially controversial statement under the remedy section is that the Regulator “may also seek to improve a scheme’s security or financial position, even where there has been no contravention of any obligations under pensions legislation”
- Comparing the updated prosecution policy with that settled last September in relation to the new criminal offences (see Pensions Bulletin 2021/40), the new policy has some clarity on where a company/entity itself may be prosecuted – which is where the “offence is attributable to an individual or group of individuals who can be regarded as the “directing mind and will” of the company for the purposes of the offence"
The Regulator has also published its response to a consultation launched last September on three draft policies (see Pensions Bulletin 2021/40), necessary as a consequence of being given new powers under the Pension Schemes Act 2021. As a result it has:
- Published separately its new high fines policies for its avoidance-type powers and information requirements powers – both of these look very similar to the September drafts, with no changes to the penalty amounts and bands
- Incorporated its approach to overlapping powers and information gathering in the draft enforcement policy – again, these look similar to the September drafts. The first has some more detail on when the Regulator may pursue a financial penalty rather than a criminal prosecution, along with a couple of new case studies. The second has some more information regarding privilege against self-incrimination. It also has some more colour on what might constitute a ‘reasonable period of notice’ for responding to an information request
Consultation on the two draft policies closes on 24 June 2022.
Comment
There had been concerns about aspects of the high fines draft policies proposed in September, but now they have been set in the context of the proposed enforcement and prosecution policies many of these concerns should have been assuaged. For example, on the face of it, a failure to report a notifiable event to the Regulator attracts a penalty starting at £50,000. However, the enforcement policy means that such an outcome is by no means automatic.
As for the two new draft policies, what is most noticeable is the length of the enforcement policy. But much of the content appears non-controversial. So more a case of the Regulator doing some necessary housekeeping than proposing anything new.
The prosecution policy is more succinct and at the end has a useful table of criminal offences the Regulator can reach for. What is particularly notable about the prosecution policy is not so much the content, which, without being experts in the field of financial crime, seem to us to be ordinary, but rather that the Regulator seems to want to flex its muscles as a prosecutor. We are not sure why the normal criminal prosecutors did not drive the fraud case we reported in Pensions Bulletin 2022/16, but it seems that the Regulator is developing a hammer and those involved with pensions should have a weather eye on not becoming a nail.
Queen’s Speech reveals little of substance for pensions
This year’s Queen’s Speech contained little of direct consequence for pension schemes, with any possibility of a Pension Schemes Bill now seemingly relegated to the fourth and what should be the last Parliamentary session before the next General Election.
However, amongst the numerous Bills announced were the following:
- Draft Audit Reform Bill – which will deliver on the replacement of the Financial Reporting Council with a new statutory regulator – the Audit, Reporting and Governance Authority (ARGA) – with potentially significant changes to the UK’s audit and corporate governance regime. This takes forward the White Paper proposals published in March 2021 (see Pensions Bulletin 2021/13) on which we had been expecting a response at about this time. ARGA will also oversee and regulate the actuarial profession
- Brexit Freedoms Bill – which is intended to make it easier to amend or remove EU-originated UK law (including that impacting pensions) as well as ending the supremacy of retained EU law as it applies in the UK. This would seem to offer up the prospect of the Government choosing not to make changes to UK pensions law where this has been driven by EU-based considerations (such as the Bauer judgment in PPF compensation)
- Financial Services and Markets Bill – which promises, amongst other things, to provide additional protections for those investing or using financial products, to make it safer and to support the victims of scams
- Data Reform Bill – which promises to reform the current data protection regime set out under the UK General Data Protection Regulation and Data Protection Act 2018. This seems to take forward the post Brexit review of the data protection regime on which the Department for Digital, Culture, Media and Sport consulted last September (see Pensions Bulletin 2021/38) and on which a response is awaited
- Online Safety Bill – already published as it has been carried forward from the Parliamentary session that has just ended, one of this Bill’s aims is to prevent online fraud and scams by requiring large social media platforms and search engines to prevent the hosting or publication of fraudulent paid-for advertising. This could be of particular relevance to pension scams
- Boycotts, Divestment and Sanctions Bill – which is intended to stop public bodies from adopting their own approach to international relations. We had a foretaste of this in February in a successful amendment made to the now Public Services Pensions and Judicial Offices Act 2022 (see Pensions Bulletin 2022/08)
As is customary at this stage, there is no news as to when these Bills will be introduced to Parliament. The Audit Reform Bill will also be exposed for consultation before it is introduced.
Comment
A Pension Schemes Bill remains needed in order that the Government can complete a number of promised reforms (such as an authorisation and supervision regime for DB superfunds and to deliver on the promised auto-enrolment reforms), but we will now have to wait at least another year before there can be any legislative action.
