The Pensions Ombudsman (TPO) must make significant changes to its leadership structure in order to provide "additional insight… and more challenge on organisational strategy", a governmental evaluation has concluded.
The tailored review of the service, conducted for the Department for Work and Pensions (DWP), has recommended that TPO installs a chief operating officer (COO) as well as two non-executive directors, one of whom should take a lead role.
These would be in addition to those already on TPO's executive board: The ombudsman, Anthony Arter, a casework director, a legal director, a business director, and an unremunerated non-executive director.
However, with TPO having "more than doubled in size" over the past five years, the "governance arrangements need to evolve to provide stronger checks and balances", with the current non-executive "highly valuable" but, as it is an informal role with no open recruitment, simply a "critical friend" appointed by The Pensions Regulator.
Such appointments, via an open recruitment process, could fill "key skill gaps", including strategic horizon scanning, organisational change leadership (including digital service delivery) and risk management, the report said, as well as bringing TPO into line with wider governmental good practice on corporate governance.
The introduction of a COO, either via secondment or recruitment, would "accelerate the service transformation", and "free up more time for the ombudsman, deputy ombudsman, and wider executive team to expand their personal involvement in more systematic stakeholder engagement", while also supporting "effective succession planning".
The 18 recommendations also include a suggestion that the the adjudication body should refresh its key performance indicators (KPIs) to reflect its "expanded remit and customer service commitments". The review panel expressed concerns over "whether this system of business planning and performance monitoring is sufficient for evaluating TPO's effectiveness, or whether it is sufficiently ambitious".
The service currently has three KPIs that are tracked monthly at board level and reviewed in its annual report and accounts. For 2017/18, these were completing new investigations within seven months on average; completing 1,800 investigations per year; and ending the year with 700 investigations in hand.
TPO should also establish a volunteer strategy to "clearly articulate how volunteers are utilised and how the associated risks and opportunities will be managed", and agree a timetable and resource to fully refresh information and tools on its website.
In a statement, Arter said: "I welcome the publication of the tailored review. As it states, many of the recommendations are already significantly progressed and reflect the changing needs of TPO given its transformation over the last few years.
"I look forward to working with DWP, our staff, volunteers and stakeholders to implement the recommendations made by the review."
All 18 recommendations have been accepted by TPO, the DWP and the Cabinet Office, and approved by minister for pensions and financial inclusion Guy Opperman, and will now be implemented. A further review of the TPO will take place in around five years' time.
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