UK - New regulations to clamp down on "cowboy firms of independent trustees" may be added to the Pensions Bill.
A parliamentary standing committee is putting forward an amendment to the Bill in a bid to stemming the tide of unscrupulous individuals setting up as independent trustees and failing to act in the best interest of scheme members.
Experts say regulation is overdue to protect schemes from such “cowboy firms” with little market experience.
Chief executive of the pensions advisory service, OPAS, Malcolm McLean said: “A change in the law is needed to protect against cowboys who just appear out of the woodwork. They charge £3000 one minute and £5000 the next and no-one holds them accountable.”
Under the proposals, independent trustees will register with a regulator – most likely OPRA – and will have to account for their fees. The regulator will have the power to impose a fee cap, if it is deemed necessary.
Capital Cranfield Trustees managing director Bob Bridges (pictured) said he was not surprised a cap on wind-up fees was being mooted.
Currently, he says, there is too little control as an insolvency practitioner can appoint an independent trustee who would be unrestricted in both setting and collecting their fees.
However, Bridges added: “The devil is in the detail. It is a good thing there is some process to review the fees of independent trustees but it depends on how much they make the cap. If the work needs to be done then you can’t pay staff without the money.”
The 24-strong cross-party committee was chaired by Labour backbencher Win Griffiths MP.
PP has compiled a list of what to watch out for over the coming months.
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In this week's Pensions Buzz, we want to know if you believe there is ever a case for combining retirement savings products with other savings products, and if the PPF levy for sponsorless schemes is appropriate for DB consolidators.