Officials from the Occupational Pension Regulatory Authority (OPRA) have been criticised in a report from the Department for Work and Pensions (DWP) for their handling of the theft of almost £3m from an occupational pension scheme.
The Hosker Report, an inquiry into the theft of the C.W. Cheney and Son pension fund has blamed the lack of communication from a number of OPRA officials for the ease in which five men were able to steal £2,918,915 from the pension fund by using puppet trustees.
In the report was a list of recommendations on how to improve the communication process along with an increase in powers in relation to trustees, including a minimum number per scheme and the ability to suspend or dismiss a trustee if required. But as OPRA no longer exists, being replaced by The Pensions Regulator in April this year, the recommendations of the report appear defunct particulalry as the DWP claims they have already been incorportated by Pensions Regulator as a result of the Pensions Act, 2004.
According to the report, the communication problems began in 1999 when various officials at OPRA were made aware of a key individual who was described as having plans to “liberate” pension funds.
Although he and the two trading entities he used were discussed, and a report was written on his background of director disqualification, bankruptcy and prison record, no action was taken when he became a point of contact for the Cheney fund, despite a discussion between OPRA officials about the case in June 2000.
It was not until October that year that the full extent of the theft was revealed after a former managing director of Cheney complained to OPRA that the pension fund was taking too long to reply to his request for early retirement. This led to a site visit and after interviews with the company accountant, who revealed they didn’t know who the trustees were, it was discovered the Cheney pension fund had been reduced from £2.9m to less than £200,000. An independent auditor was appointed that day.
The report in its summary states it has no adverse comment on OPRA’s general approach to regulation, saying it may have contributed to the regulatory failures in the Cheney case, but only marginally. It attributed the fundamental cause to the lack of communication where the background of the key individual involved in the Cheney case had been known since April 2000, but no sharing of information had occurred.
It also says the ease with which the key individual was able to steal the money was largely attributable to the failure of a number of OPRA officials to co-ordinate effectively. The report claims a number of initiatives were taken to make information available to caseworkers but were not used to advantage in the Cheney case.
A spokesman for the DWP says: “The Hosker Report's findings are not about individual blame, rather about organisational failings which were subsequently addressed by OPRA, and in the Pensions Act 2004 which then paved the way for the introduction of the Pensions Regulator.”
He adds it was not the case that because OPRA no longer exists the recommendations would not have to be implemented. He says they had already been addressed in the set-up of The Pensions Regulator, which is a different organisation, with different powers, processes, management structures, team structures, and IT systems, making it much better able to proactively intervene in situations quickly where it believes there is cause to do so, and to take action to prevent abuses or illegal activity to protect people enrolled in pension schemes.
He continues: "It has new, extensive powers introduced under the Pensions Act 2004 to obtain, collate and analyse up-to-date information which will help it to identify those schemes which pose the greatest risk to members' benefits. This includes data on schemes, trustees, advisors and funding positions. Central to this is better communication between the regulator, industry and government."
The Pensions Regulator say it can not comment on the specific operational running of its predecessor but states it has a range of tools and powers, including the ability to freeze a pension fund while under investigation, that were not available to OPRA because of the limits of the 1995 Pensions Act.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected].IFAonline
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