Review proposes beefed up UK pensions regulator
UK- Alan Pickering’s report into simplification of the pensions industry has proposed a new beefed up pensions regulator to work alongside the Financial Services Authority.
According to Pickering, the new regulator will be both advisor and regulator and more productive than the existing Occupational Pensions Regulatory Authority (Opra).
The report is at pains not to criticise Opra whose weakness is in its design. “Opra was not set up to give advice to pension scheme professionals or to comment on ambiguities within the regulatory legislation,” says the report.
“A number of contributors to the review commented that they would appreciate this kind of support from Opra but that Opra is constrained in the help it can give.”
Under Pickering’s proposals, the new regulator would work alongside the FSA opposed to replacing it as overseer of the pensions industry.
The FSA will retain its role in regulating various aspects of personal pensions and stakeholder schemes including marketing, selling and product disclosure.
Like Opra, the new regulator would rely on whistle blowers but would have the power to intervene at an earlier stage than Opra is currently able to.
Says Pickering: “Opra is currently constrained in it ability to get involved with schemes where there is a suspicion that things are not being handled properly. In many cases, by the time Opra becomes involved, it is too late and the damage has been done.
“We envisage the new regulator having the authority to intervene in a proactive way where it feels that it is necessary, and having the skills and knowledge to identify any bad practice or potentially criminal activity at any stage.”
In addition to regulating, the new body would play an advisory role. “it should not only sponsor and monitor the operation of codes of practice, it should provide advice and guidance on those codes of practice,” says Pickering.
Mercer Human Resource Consulting Pickering welcomed the proposal. Senior actuary Deborah Cooper says: "Clearly Alan Pickering has seen the benefits from the Financial Services Authority in modifying its approach from box ticking to focusing on principles and outcomes.
"We welcome the recognition of the role that professionals can play in ensuring pensions are provided responsibly, and the suggestion that Opra’s role could be altered to be supportive as well as admonishing."
Other commentators are less enthusiastic. Aon Consulting believes the creation of a new regulator contradicts the initial brief and will complicate the pensions industry.