Box Clever FSD may be invalid due to lack of clarity

Lack of clarity on how much ITV could be forced to pay out after the Box Clever financial support direction undermines the order and could leave it invalid, a lawyer warns.

The Pensions Regulator’s determinations panel issued an FSD against five target companies, all related to ITV, in relation to the £62m deficit of the Box Clever Pension Scheme late last month.

Linklaters partner Tim Cox said the lack of information from the determinations panel on how much the targets have to pay undermines the FSD and it should be considered “invalid”.

He told PP: “The panel should not just say we require you to provide financial support without giving information about what support and how much.

“The panel’s determination should be considered invalid because it does not specify the financial support to be provided. It’s like saying in a criminal trial that if they’ve decided someone is guilty then they’ve got to go away and negotiate the sentence with the police. It’s farcical.”

Currently the 11-person deter­­­minations panel issues the FSD, the recipient then has to negotiate the specific amount due with a team of investigators from the regulator.

The panel does not stipulate the nature of the financial support it has ruled on.

Cox said the system was unfair on the target company. He explained: “It’s unfair on the target because the target has to negotiate not with the decision makers but back with the investigators.

“If they don’t reach agreement at that point the decision maker just steps in with a contribution notice.”

A statement from the regulator confirmed it was not the role of the determinations panel to engage in detailed discussions “as to the level or form of financial support or to undertake related due diligence”.

It added: “After an FSD has been issued it is for the recipients to propose, in negotiations with the trustees, whatever level and form of financial support they believe to be appropriate.”