I love it when you get “Pension News” from a lawyer. The latest gem comes from Pinsent Masons, who reveal that the FCA expects Independent Governance Committees to challenge insurance companies.
This is what I call a “not news” story of epic proportions!
That after this…
we could simply allow 1.3m employers to sign up blind to workplace pension schemes beggared belief.
Of course IGCs are going to have to challenge the insurers, and their little brothers the GAAs are going to have to do this too.
The question is who is going to do the challenging? In last week’s policy statement, the FCA held with their original idea of allowing corporate trustees to participate on IGCs. The duties of Corporate Trustees are the responsibility of a firm of Professional Trustees but not the responsibility of a named individual. Expect corporate trustees to be singularly lacking in personal conviction and long on formulaic box-ticking.
If you add to the corporate trustee, the two insurer nominated trustees, you have a block vote of 3 out of 5 trustees that potentially could block any contentious stuff getting either to the insurer or (heaven forbid) to the policyholders.
It’s time for those who value independence to stand up and be counted and to raise their hands.
If a hard core of sympathetic corporate trustees , insurance executives and stooges drawn from the bibulous world of NAPF conferences are allowed to pack these committees, IGCs and GAAs will have the teeth of a new born baby.
We need people who genuinely challenge, people like Alan Higham and Ros Altmann, journalists like Norma Cohen and Paul Lewis and the very people who have raised the awareness of the inadequacies of fund governance, Alan Miller, Chris Spiers and the daddy of them all Professor John Kay.
I am singularly unimpressed when I read of corporate trustees being wheeled to the table. I expect no challenge from such amorphous entities. I will be singularly impressed when I see people like Mick McAteer, Nigel Stanley and John Gray staring down bad practice.
What levers have we, the policyholders got on this? Do we have any say in who sits on these committees? Is there a voting procedure that allows us to nominate and vote for people who we want to represent our interests.
I would be super impressed by the first insurance company that organised an online vote of members with candidates selected by the plebiscite.
The reality for now is this is too hard. Corporate democracy is in its infancy and with the possible exception of Legal & General, I can think of no insurer who would be brave enough to allow a genuine troublemaker onto the Independent Governance Committee.
It is 900 years since Magna Carta, a high point in British disruption. We should do well to remember that the great charter did not become effective till some time after its signing. The King was able to keep the crowd at bay for years. But once these charters (and the FCA’s policy statement is a people’s charter) are written, they cannot easily be unwritten.
The charters exist to this day, on public display, so that we do not forget our fundamental freedoms. The IGCs exist for the benefit of policyholders, not lawyers or corporate trustees and most of all, not as a smokescreen for ongoing insurance bad practice
Like Charlie, we are IGC.