Robin Ellison has too refined a mind and too fine a writing style, for his thoughts to be left languishing on Linked in. Not since the days of John Quarrell has there been such a dissenting voice, speaking against the scope-creep of regulation.
This beautiful article mocks our masters with Robin’s usual gentle irreverence. He is beyond hoping for change and yet must return to his theme another time.
Schadenfreude has a bad name; it is not usually gracious to delight in another’s misfortune.
But a broadcast on BBC Radio 4 January 26 2020 (Something understood) on the topic suggests that there are times when it is acceptable, and now might just be one of them.
The FCA is having a bad time at the moment; it has lost its chief executive, it has been ordered to pay for an error on its register which caused serious loss to an IFA, and now it needs to write to 160,000 people about their DB pension transfers because around 80% of the advice given was sub-optimal (ie ‘bad’) (FCA on pension transfers)
But worse, much worse than this, was the £2,000 fine it has had to pay to The Pensions Regulator because its Chairman’s Statement on its pension fund was also sub-optimal. The size of the fine is relevant – it is the highest that can be imposed. For trivial breaches the minimum £500 is the norm; £2,000 suggests the breach was very serious indeed.
Of course, the FCA could always appeal – and they would almost certainly be successful. A judge in the First-tier Tribunal at the end of 2018 suggested that the legislation empowering TPR to impose fines was probably invalid. The decision for some reason is not on the usual case-law websites but I’m happy to make copies available on request (see Moore Stephens Master Trust v The Pensions Regulator  050 PBLR (018), 14 December 2018).
The sight of one regulator fining another regulator is in some ways delicious to observe. But it also makes the point that there is now no reputational cost to a fine. If even regulators are fined, fines are simply a normal incident of running a pension scheme.
How much better it would have been if one regulator had had a coffee with another regulator or pension trustee chairman and suggested that next year the statement should be better, and explained what it thought what the fault was.
This sanction is simply grandstanding, and brings regulation into disrepute. The FCA is entitled to whinge, but it also is guilty itself of grandstanding; it has issued a ‘Dear CEO’ letter complaining that firms are giving unsuitable advice, not preventing consumers from falling victim to pension and investment scams, not encouraging their clients to claim from the ombudsman and charging excessive fees.
What has the FCA been doing since 1986? It may be that consumers would be better off to relinquish trust in the regulator to protect them, and take out a subscription to Which? instead. It would be cheaper and more effective.
Meanwhile just to continue the note on pensions and the arts: Mick Herron (a friend) has just published ‘The Catch’ in the States, one in a very successful series of thrillers. The hero, of course, is a part-time pensions administrator. Pensions and spies have a long-standing connection, remember Bruce Willis falling in love with his pensions administrator in the Red and Red 2 movies? What is is about pensions administrators that makes them so attractive?
Finally, back to the FCA. It has set out a list of complaints against the asset management industry (Siobhan Riding, City watchdog targets asset managers, FT, 23 January 2020) following the Woodford imbroglio and concentrating on liquidity mismatches. It is inevitable that regulators fight the last war, but an article in the same issue of the FT (Joe Rennison, Meet the new bond kings, FT Big Read, January 23 2020) explains how computerised portfolio trading fixes liquidity issues. Problem solved.
I think Regulators now have their own trade body.
Presumably to help shield them from over regulation or over zealous National Audit Office investigations into how well they regulate or over/under regulate, or just spend money on very large wide screen TVs, which appears to be the gadget of choice at most regulators these days.
I think the largest TV I saw recently was at NEST’s offices in Canary Wharf – but I suppose they don’t regulate as such. So we’ll let them off, I’m sure that TV helps them administer all those pensions!
Henry, I don’t believe there was any grandstanding going on. Not to have levied a fine would have brought regulation into disrepute. The Regulator has no power to waive a fine in this situation, so a coffee and a chat would have been wholly inappropriate given no coffees and no chats were offered to the other bodies fined. Should the Regulator be empowered to have a coffee? There’s a different question and one which I hope will be answered soon, in the affirmative, to bring some degree of pragmatism to the production of a document which no longer fulfils the purpose which was surely intended at outset – to provide members with an update they might read on how well or otherwise their DC Plan is being run and how much it is costing them for the pleasure of being a member. Here’s hoping I never get asked to go for a coffee!