Extending a hand to the Regulator

Saturday morning allows me time to expand on some hurried thoughts in my post The Regulator, wisdom and the crowd.

Alan Higham who is becoming my guru in these matters, has commented

I dare say I am now persona non grata at the DWP after I criticised their attitude at a recent pensions meeting aimed at discussing getting people a better deal at retirement from DC schemes. They have had a OMO committee for 10 years which has made no discernible progress. At that meeting was a lady who has policy responsibilities in this area. She said nothing for the whole meeting. Why was she there? Was she just under instructions to take notes and report back. Even harsh criticism couldn’t get even an acknowledgement that the DWP was in the room.

I have taken the view that it is time to make our criticisms of regulators and policy makers clear. I may be wrong in some thoughts and observations but if policy makers won’t engage in public then we will end up with more bad policy.

After all, the current state of pension provision in the UK wouldn’t make me proud of the policy decisions made in the last 20 years.

Criticising the Regulator is a dangerous business. Many firms, ours included have a symbiotic relationship with the Pensions Regulator. TPR sends us problem cases to sort out, they make sure we do the job properly.

Because of our mutual reliance there is a danger that our relationship could collapse into a love fest of poor governance. It is right that the Regulator keeps a proper distance.

There is a resource issue, the Regulator cannot be everywhere. They need to ration their research meetings just as we need to keep an eye on our bottom lines. This is the point behind using social media ( and conferences where there is a congregation of relevent conversations).

There is also a trust issue. When things break down in symbiotic relationships, they break down big-time. Talking with an early staging auto-enroler this week she bemoaned the 60 pages of prescriptive regulations introduced in this summer’s DWP consultation. I asked her what drove the complexity – “oh they’re just responding to issues we’ve raised”.

When we set policy on a reactive basis we end up with the kind of rules based regulation already turning the dream of auto-enrolement into a nightmare. There is an alternative and it’s based on trust law which I understand to be principled based.

When the Pension Regulator takes a step back and produces a paper like DC outcomes , we should applaud. It is up to trustees , sponsors and their advisers to decide what works best ..we should join up the dots.

The Regulator’s frustration stems from a distrust in our motives. There is a feeling in Brighton, Canary Wharf and Whitehall that given an inch, we will take a mile and that any loophole will become a window of opportunity through which we will jump.

I don’t blame Regulators for thinking this way. They are the ones whose balls are on the block when the balloon goes up. Maxwell…Equitable Life…Lehman. We should think twice before putting the boot in. Every time we do, we harden their perverse resolve to screw down our activities by prescription.

Like Alan and Robin Ellison,  I  blame Regulators when they refuse to engage with us. Alan’s points are very specific but we could equally talk about the wider opportunities. I’m not expecting tPR to set up their mallowstreet or Schemexpert, but when mallowstreet or trusteeweb or the PP show or the Pension Play Pen invite, surely we should expect more.

I hope a few in Whitehall or Brighton are reading this. If they consider this criticism to be unjustfied I hope they will comment on what I am saying or give me a call and set up a meeting to tell me why.

The complexity of pension regulation is a result of over-prescription, itself a result of distrust that stems from a lack of communication. It would be a shame if instead of responding to the extended hand, the regulatory reader retreated further.

 

 

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
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