Paul Thornton has issued a consultation asking whether The Pensions Regulator should work more closely with the Financial Services Authority to cover a gap in regulation of IFAs advising on transfers between occupational pensions schemes.
The 20-page document published by the Department for Work and Pensions (DWP) sets out the initial evidence received by Thornton, a previous president of the Institute of Actuaries, who was appointed in January to head up an independent ‘Review of Pensions Institutions’.
In the consultation paper, which has a three-week deadline for responses, Thornton says he has tried to hear as much evidence as possible before publishing the consultation paper, and he says the feedback received so far indicates the new bodies, the Pension Protection Fund (PPF) and TPR “have moved both fast and effectively to respond to their challenges”.
He says: "So far I have seen no evidence to suggest that the current arrangements for distribution of functions between the various institutions in the pensions landscape are not fit for purpose”.
However, he warns there “may be some ways in which they could be made more efficient and effective – to provide an even stronger base for dealing with the changing landscape”.
As a result, he has set out a series of three key questions “worthy of careful consideration” which he believes deals with several issues which have emerged during the first stage of his review:
- Is there a good case for bringing TPR and PPF closer together?
- Is there a good case for bringing FSA and TPR closer together?
- Is there a good case for bringing the Pensions Ombudsman and the Financial Ombudsman Service closer together?
Within these, he points out one of the arguments for bringing the FSA and TPR closer together is “there appears to be a gap in coverage of regulation and supervision of IFAs advising employers on a transfer between one occupational scheme and another. This is also affecting redress for individual complaints because the Pensions Ombudsman and the Financial Ombudsman Service (FOS) have no jurisdiction in these cases”.
In addition, the consultation, which closes on 31st March, points out one of the arguments for combining the PPF and TPR into a single organisation comes form the TPR itself which suggests “a combined organisation would be better able to fulfil the government’s overall objectives”.
Thornton also poses some additional questions in the consultation paper which debate possible changes to the boundaries of the Pensions Advisory Service (TPAS), the Financial Services Compensation Scheme (FSCS) and the Pensions Regulator Tribunal (TPRT).
Meanwhile, the document warns the introduction of personal accounts in 2012 is likely to put extra pressure on the TPR, while Thornton says developments “being mooted” in capital markets, such as longevity hedging instruments and capital solutions which do not involve annuity buyout would alter the risks carried by pension funds, and by the PPF in underpinning them.
He also says the FSA’s role in regulating pension-based financial products could also increase as a result of annuity buyouts, while the external deregulatory review and the financial capability review being run by the Thoresen taskforce could both propose changes which would impact the institutions under review.
Thornton says it "would be useful to alert me as soon as possible to any new points, and to follow up with more detailed comments by the end of the consultation period”.
He adds: “The next step is to consult widely on the key themes that have emerged so far in my work. As part of my role, I have been asked to encourage debate and to build consensus on the best way forward, and I am therefore seeking views from a wide cross-section of stakeholders and am publishing the comments I am receiving.”
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 7034 2681 or email [email protected]IFAonline
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