Out-Law News | 21 Aug 2018 | 10:24 am | 2 min. read
According to its quarterly compliance and enforcement bulletin (15 page / 63KB PDF) TPR used several powers successfully for the first time in the second quarter of 2018.
In an investigation into pension fraud, it secured production orders under the Proceeds of Crime Act 2002 for the first time. The orders required a bank to hand over statements and other details of the accounts linked to the trustees of a pension scheme, which were needed for the ongoing criminal investigation.
“Its use of applications for production orders is very fresh in the context of the Regulator trying to deal with pension fraud. It is likely to be a more effective tool than its usual (section 72) information gathering power, but with more limited circumstances in which it can be used, borne out by the statistics,” said Ben Fairhead, a pensions expert at Pinsent Masons, the law firm behind Out-Law.com.
“It is welcome that the regulator is exploring options like this in the fight against pension fraud, but it is always going to be more expensive and onerous to pursue High Court action. The power to seek restitution under the 2004 Pensions Act has, for example, been used on only limited occasions, and the sort of scale and nature of pension scams we have seen over the past few years would not have been anticipated when that power was originally created,” said Fairhead.
“The message remains prevention of pension scams is better than cure,” said Fairhead.
TPR said it used its powers under section 10 of the Pensions Act 1995 for the first time to fine a trustee that failed to complete a valuation on its defined benefit (DB) pension scheme. The trustee was ordered to pay a £25,000 fine after it twice failed to have the scheme valuation completed, as is required every three years.
It also prosecuted a recruitment company, its directors and a number of its senior staff after they worked together to illegally opt out workers who had been automatically enrolled into a workplace pension scheme.
That was the first time TPR has prosecuted offences under the Computer Misuse Act 1990. Each of the defendants pleaded guilty to the charges.
“This bulletin gives some insight into the regulator’s desire to be seen to be taking harder-hitting action yet, at the same time, the limitations it faces at times and the need, like any regulator, to ensure it is using its powers appropriately,” said Fairhead.
The bulletin also shows that TPR stepped up its enforcement efforts in the last quarter. It used 43,700 enforcement powers between April and June 2018, compared to 35,862 the previous quarter – an increase of almost 22%.
There was a 9.5% rise in the number of fixed penalty notices over automatic enrolment, and 27,219 automatic enrolment compliance notices were issued last quarter. TPR said this was the most it had ever issued in one three-month period.
TPR also used its powers to take action against trustees 25 times between April and June for failing to complete a scheme return on time. It used information gathering powers 31 times, and appointed 162 trustees to run schemes in order to protect members’ benefits.
TPR frontline regulation executive director Nicola Parish said TPR did not always have to use its powers and would work with employers and trustees to agree solutions to problems if it could.
The UK government is currently consulting over proposals to strengthen TPR’s powers where the savings of DB pension scheme members could be at risk. TPR could be given the power to issue civil penalties of up to £1 million in the most significant cases, with new criminal offences also possible.