The Goode report, published four months ago, recommended introducing a new pensions regulator with wide-ranging powers, minimum solvency requirements for pension schemes and compensation to protect against fraud and theft.
But, in a response to the Department of Social Security, the Association of Corporate Trustees (Tact) dismissed these proposals as inadequate. While in favour of better regulation, the association fears that regulators inevitably lack the devious and unethical instincts of the wrong-doers they are trying to eliminate, and are 'backward-looking' in approach.
Tact said the most notorious failure of regulation was the Maxwell scandal that prompted the creation of the Goode committee. 'The scandal followed the misappropriation of assets largely under the control of an investment management company . . . regulated by (the Investment Management Regulatory Organisation), which was generally regarded at that time as the best of the self-regulatory organisations.'
Making a crude estimate based on the costs of the financial services regulators, Tact suggests that the new regulator could cost pounds 300m, or pounds 18 a year for each of the 17 million members of pension schemes.
Imposing an obligation on professional advisers to act as 'whistle- blowers' was also a 'futile' response.
Tact suggested independent trustees, with official approval, could take on much of the role proposed by the Goode regulator. The association claimed that this would be a cheaper and more effective solution.
The National Association of Pension Funds broadly supported the Goode proposals but warned of the uncertainty that will be caused by the two-year delay before new legislation takes effect.
The NAPF also warned that if minimum solvency requirements are made too onerous, employers will abandon earnings-related pension schemes in favour of 'money purchase' arrangements that offer less security for members.Reuse content