Robin Ellison: Could we have a TPR list of wrongdoings that are acceptable and those that are not?
In the latest in his series of columns for Professional Pensions, Robin Ellison looks at professional standards, fines and morality.
Toujours la politesse
When David Lammy, the foreign secretary, called the president of the United States a ‘woman-hating, neo-Nazi-sympathising sociopath', should he have been fined by the Office for Parliamentary Standards for criticising another politician/ businessman/ entertainer? He was not alone in governmental discourtesy to the United States of course; the Attorney General called Mr Trump an ‘orange tyrant'.
Both are barristers, who are entitled in certain circumstances to wear wigs and gowns, so higher standards would be expected of them than either the rest of us, or even solicitors, generally regarded by the bar as a more junior and less respectable profession.
The director general of the Bar Standards Council (BSC) noted in a blog that he does expect higher standards (see: Free speech and professional obligation: Striking the balance).
The blog followed the failed prosecution of Dr Charlotte Proudman where a tribunal found she had no case to answer when she was charged with professional misconduct for criticizing a judge in a family law case (see: Bar tsar sparks row by telling lawyers watch what you say, The Times, 13 February 2025). Her remarks were intemperate and lacked grace – and she broke an unwritten code that even if you disagree with the decision of a judge made against you, you lick your wounds in silence. But the tribunal found she had the right to express her opinions, however impolite they may have been (See: Dr Charlotte Proudman, Report of finding and sanction, The Bar Tribunals and Adjudication Service, Case reference 2022/1204/D3, 14 March 2025). The BSC, Dr Proudman's regulator, has been duly admonished, but the BSC has not commented or apologised or offered to pay her legal fees. It wasn't mentioned in the trial, but the Crime and Courts Act 2013 s33 abolished the common law offence of ‘scandalising the judiciary' (ie being rude about a judge).
The Proudman case was not a good look for a regulator. So The Pensions Regulator (TPR) must similarly be reflecting on its powers to decide whether trustees are fit and proper people. If we are dishonest in our private life, or even steal a bar of chocolate (or as the once famous Professor Joad did, cheat on his train ticket), or speed, or injure someone when cycling, does that make us unfit to be a pensions manager or a trustee – or a regulator? And are regulators really set up to judge the behaviour of the rest of us in considering the issue of bullying or misbehaviour in the office such as in the case of Crispin Odey, who has been disqualified from managing other people's money by the Financial Conduct Authority? Maybe the next LawDeb debate could consider the issue – using barristers as counsel. And, in the meantime could we have a TPR list of wrongdoings that are acceptable and those that are not (see below)?
Fines, fines, fines
It's hard to be a major player in the City these days without being fined for something; it's rather a badge of honour. The banks annually make provision in their accounts to subsidise the FCA and PRA. PricewaterhouseCoopers was fined £2.3m in 2016 by the Financial Reporting Council for mishandling the auditing of failed sub-prime lender Cattles and its subsidiary Welcome Financial Services when it audited the financial statements of Cattles and Welcome for 2007 (see: Disciplinary case relating to PwC's audits of Cattles plc and Welcome Financial Services Limited). Then of course they were fined £2.8m in March 2025 for a similar error in relation to the audit of Wyelands Bank (see: Sanctions against PricewaterhouseCoopers LLP and Jonathan Hinchliffe). And that's not to mention a string of expensive decisions against them in relation to London Capital & Finance, Babcock and many others.
PWC is not alone. The University of Sussex has been fined recently over half-a-million following its pusillanimity in the trans debate (see: University of Sussex fined £585,000 for free speech and governance breaches). And solicitors Herbert Smith were fined over £800,000 by the Office for Financial Sanctions Implementation for an error when closing its Moscow office (see: https://www.gov.uk/government/news/penalty-issued-against-subsidiary-of-major-law-firm-for-breaches-of-sanctions-linked-to-russias-invasion-of-ukraine).
The reputational impact for those who were fined is probably negligible. Will any client not put PWC on their tender list because of the fine, will anyone not instruct Herbert Smith because of the unintentional breach of sanctions (self-reported incidentally) or refuse to teach or study at Sussex University because of its egregious and disgraceful treatment of Dr Kathleen Stock during the woke pandemic. Fines are a rough and often counter-productive way of punishment. In other areas of misdemeanour, we build punishment systems to ensure rather forlornly that such episodes can never happen again. Genuine regulation (if it is needed, which it probably is not) might involve the regulator having tea at the Athenaeum with the senior partner and telling him to be more careful – or involve criminal prosecution in significant cases. If we are really serious about sanctions, perhaps we should build a special prison for City partners and university vice-chancellors, furnished with swimming pools and decent libraries. Or maybe re-introduce the death penalty. That would ensure such incidents would never happen again.
Fines and TPR
Meanwhile TPR fines continue to be levied on Chair's statements, although they are hard to find on the TPR website – and now there are beginning to be fines for failures by smaller DC schemes to provide Value For Money. These VFM fines do not describe what behaviour prompted the fines; there is no explanation of what would have been good value for money, so there are no lessons for the rest of us to learn. Meanwhile there continue to be more fines for AE breaches, with many appeals to the tribunal, suggesting there may something wrong with the system. Indeed, a recent very unhappy judge (in M Rose Construction v The Pensions Regulator) cancelling what he thought was an unfair fine imposed by TPR held as follows:
11 The Regulator refused to carry out a review. It stated: ‘The Respondent submits that the appeal grounds do not amount to a reasonable excuse for the failure to comply with the requirements of the Compliance Notice or indicate that the Respondent has acted unfairly in any way.'
12 The Regulator is in its response to the tribunal concerned to demonstrate that the Appellant company received a communication informing it of its obligations. The Regulator, having satisfied itself that the pre-condition for issuing a penalty have been met has declined the opportunity to consider the evidence and argument put forward on behalf of the Appellant company. It has neither sought confirmation of the facts alleged nor queried their veracity and weight. It has entirely discounted them. The Regulator has been administering this system for over a decade, it has ignored the newness and scale of the company, the possible impact of the extraordinary pandemic on such a small new organisation as well as ignored the statement of the impact of a bereavement. Within a system of bounded rationality it has satisfied itself of the existence of a pre-condition and ignored everything else. The words quoted above (paragraph (8) are a somewhat concerning statement for a Regulator to make and indicates a significant failure to appreciate the function of regulation which is precisely to promote the performance of ‘underlying duties'. The Regulator appears satisfied that it is entitled to issue a penalty and views that as sufficient. I am entirely satisfied that this behaviour unambiguously indicates that ‘the Respondent has acted unfairly'.
13 The Regulator appears to consider that the provisions as to the service of documents are a full and complete response to the issues raised by the Accountant. It appears to discount the possibility of moderating a sanction during a review...
What would be helpful for all of us would be a TPR discussion document exploring any revisions to its sanctions policy following this decision. Meanwhile the government has underpaid what will be the thick end of a billion pounds of state pensions (Maisie Grice, Government finds £800m of state pension underpayments, FT, 26 April 2025). Quite rightly, the pensions minister has not been fined.
Which is probably as it should be. John Hasna, a US professor of law, explains (Common Law Liberalism, Oxford University Press, 2024) that, terrorism and psychopath crimes apart, these kinds of sanctions are completely unnecessary. Maybe we should send a copy of his very readable book to the TPR Board. And staying with the US, a jury has awarded $38M in one of the first decisions which went the members' way (Khan v Bd of Dirs of Pentegra Defined Contribution Plan, S.D.N.Y., No. 7:20-cv-07561, jury verdict 4/23/25). The volume of industry comment in the US shows how important the decision is; the judgment has not yet been published, and the case may of course be appealed, but it shows that we do not need regulators to ensure VFM.
By the way. . .
The FT reports that since 1900 UK equities have returned 5.4% compared with 1.4% for bonds. US equivalents are 6.6% and 1.6% (Jonathan Guthrie, How to think about returns in a bear market, FT, 26 April 2025). We seem to have spent quite a lot of money to go ‘risk-free'.
Morality again
Marriage (involving one man and one woman) has been around for a while; polygamy maybe rather longer. Same-sex marriage is rather more recent. And sologamy (where we marry ourselves) is even more recent (see eg Sarah Ogilvy, Chronically single? Sologamy could be the answer, Prospect Magazine, May 2025). Sologamy of course not only benefits from a simpler divorce procedure, but also illustrates that thinking about what is right and wrong changes over time.
For example, the US Secretary for Defense Pete Hegseth has suffered from marital incontinence before finding god. He had to suffer a curious grilling before the Senate Armed Services Committee before being confirmed (see: www.youtube.com/watch?v=chyT4ciPqn8). Hegseth has enjoyed a less than perfect record in the stability of his relationships , but if adulterers were barred from public office, we would be short several US presidents and British Prime Ministers. And there is a severe hypocrisy issue: it would need regulators, lawmakers and others to guarantee that they also had perfect marital track records. Which is why Crispin Odey's barring by the FCA because of his Benny Hill behaviour in the office, already mentioned, despite being cleared in a full criminal trial, leaves a rather sour taste (the decision is being appealed, see: FCA decides to fine and ban Robin Crispin Odey, FCA Press Release, 17 March 2025).
The holding of asset managers to ideal behaviour sounds rather puritanical; we may need the occasionally swashbuckler to manage our money. An article by a former head of the family division of the High Court (Institutionalised dishonesty and hypocrisy, Family Affairs, 2024, noted in Joshua Rosenberg's substack) refers to nineteenth century caselaw in relation to a decree for restitution of conjugal rights (breach of which was originally punished with excommunication and prison until being abolished in 1970). It would be amusing to learn what punishment the FCA would impose on asset managers in relation to a modern case of separation (although in the meantime (see: FCA unacceptable behaviour policy), where it sensibly suggests that if it see something unacceptable, it will first have a chat with the individual.
FCA in trouble again
The FCA have just re-appointed their existing CEO. He may have a hard job cleansing the stable in his next term. It's rare that a month passes without some adverse event afflicting it (or rather the public, through it); it looks as though there ought to be a regular spot on the pink pages for the FCA and its travails.
It was given a beating a month or so back over its proposed changes to its naming and shaming policy, ie announcing investigations into companies, even though the evidence showed that most investigations, which took around four years, were not pursued, while in the meantime imposing reputational damage on the companies. The House of Lords Select Committee criticised the FCA for misleading it on the evidence it gave in relation to the practice of other overseas regulators; it did not in terms say the FCA lied, but if a regulated entity had behaved the same way it would have been substantially fined. It's not easy being a regulator, and we all make mistakes, but deliberately misleading a Select Committee is a dangerous policy (see: Naming and shaming: how not to regulate, 6 February 2025, HL Paper 76).
More concerning is the continuing volume of regulatory stuff; the Lords committee refers to the FCA's establishment under the Financial Services and Markets Act 2000 Schedule 1ZA. When the amendments to the legislation reach ZA, we know that it is time for a redraft of the law. By the way, just to note that the Finance (No 2) (No 2!) Act 2023 was 400 pages – it was s18 in that Act that removed the lifetime allowance. S18 was repealed the following year in the Finance Act (No 2) (No 2!) Act 2024 and replaced by 47 pages of legislation to do the same thing. It's not a good look. And by the way, the FS and M Act 2000 with amendments is now 1,250 pages.
SRA to teach the FCA and TPR
We are not the only industry to despair about regulatory overreach. One of the foremost authorities on regulating solicitors condemned the Solicitors Regulation Authority (SRA) supervisory regime as ‘unfair', ‘inefficient' and crying out for root-and-branch reform. Gregory Treverton-Jones KC accused the SRA of being ‘tin-eared', ‘arrogant' and ‘generally unsympathetic to the realities of practice as a solicitor' – and took far too long to deal with cases. Describing the regulator's ‘high-handed' response to a highly critical report from its own regulator, the Legal Services Board, as ‘ill-advised', he added: ‘A little humility here and there would do it no harm, but unaccountability and arrogance tend to walk hand in hand.' (see: SRA regime is broken – here's how to mend it, Law Society Gazette, 7 February 2025).
Treverton-Jones, the co-author of the Solicitor's Handbook, described the SRA's now ‘draconian' fining regime as a calculated ‘power grab' from the Solicitors Disciplinary Tribunal. He mentions the case of a City solicitor who was told the SRA would have liked to fine him the ‘ludicrous' sum of £50,000 for failing to provide a breath sample – when the lawyer had already been fined £3,846 in the magistrates' court. The solicitor appealed to the Solicitor's Disciplinary Tribunal and was fined £2,500. Mr Treverton-Jones said: ‘Had the SRA been given unlimited fining powers [which it is seeking], it would have fined [the solicitor] around £50,000, a blatantly unfair penalty.' Mr Treverton-Jones' proposed reforms include stripping the SRA of its statutory power to fine any individual or entity more than £2,500, which he says would enable it to revert to its important role as promulgator of guidance to the profession.
As we know, TPR is currently seeking power to make its own regulations, and possibly its own sanctions. The history of the SRA suggests this may be unwise.
Robin Ellison is, among many other things, the chairman of the College of Lawmakers, a retired pensions lawyer, a visiting professor in pensions law and economics at Bayes Business School, City, University of London and chair of several pension funds
