7 days

7 Days is a weekly round up of developments in pensions, normally published on Monday afternoons. We collate this information from key industry sources, such as the DWP, HMRC and TPR.

In this 7 Days

• TPR revises guidance on tendering for fiduciary management services and setting objectives for investment consultants
• TPR publishes scams strategy
• FCA publishes consultation on changes to redress calculations for unsuitable pension transfer advice
• FCA consults on broadening access to Long Term Asset Funds
• TPO publishes corporate plan for 2022 to 2025

TPR revises guidance on tendering for fiduciary management services and setting objectives for investment consultants

Since December 2019, trustees have been required to:

• run a competitive tender process when appointing fiduciary managers in relation to 20% or more of scheme assets, and
• set strategic objectives for their investment consultancy provider.

On 1 October 2022, regulations come into force under which TPR will take over the role of monitoring and enforcing compliance with these requirements from the CMA (see our Alert for more details).

Ahead of these new regulations coming into force, TPR published updated guidance on 4 August 2022 reflecting this change and summarising the minor policy differences between the existing requirements and the new regulations. The update also includes new guidance on how trustees might assess the performance of potential and existing fiduciary managers using the Global Investment Performance Standards, a performance standard approved by the CMA.

TPR publishes scams strategy

On 3 August 2022, TPR published its new scams strategy, aimed at educating the industry and savers on the threat of scams, preventing practices which can harm retirement outcomes, and “[fighting] fraud through the prevention, disruption and punishment of criminals”. The strategy sets out actions for the next three years, including, in the first year, setting expectations that schemes include a pension scam warning in every annual benefit statement with a link to ScamSmart.

FCA publishes consultation on changes to redress calculations for unsuitable pension transfer advice

On 2 August 2022, the FCA published a consultation proposing updates to how redress is calculated for unsuitable pension transfer advice, following a periodic review. The proposals aim to reduce the impact of market volatility on calculations, and help ensure the guidance continues to reflect actuarial best practice.

The consultation also includes a chapter setting out proposals for how redress should be calculated specifically for the proposed British Steel Pension Scheme (“BSPS”) consumer redress scheme, following the FCA’s consultation on the proposed scheme earlier this year (see 7 Days).

The consultation closes on 20 September 2022. If the FCA proceeds with the proposed calculation changes, it will publish final rules “this winter”. Any changes to the methodology would apply to cases that have not been settled when the changes come into effect. In the meantime, the FCA expects firms to continue to calculate and offer redress in line with existing requirements, and to “explain that customers have the option of waiting for the outcome of this consultation to settle their case”.

A policy statement setting out the final decision on whether to establish the BSPS redress scheme is expected in “late 2022”, with the BSPS redress scheme (if it does go ahead) coming into force in early 2023.

FCA consults on broadening access to Long Term Asset Funds

Following the DWP’s consultation on proposals to improve the accessibility of illiquid assets for DC schemes (see our Alert for details), the FCA published a consultation on 1 August 2022 on draft rules to allow Long Term Asset Funds (“LTAFs”) to be more widely accessible by retail investors including pension schemes. LTAFs are FCA-regulated funds designed specifically to help DC schemes invest in various relatively illiquid assets (see 7 Days). The FCA proposes permitting the distribution of LTAFs beyond default arrangements to include self-select options, subject to similar protections to those that currently apply to default arrangements.

The consultation closes on 10 October 2022. Subject to the responses received, the FCA intends to publish a final policy statement and rules early in 2023.

TPO publishes corporate plan for 2022 to 2025

On 3 August 2022, TPO published its corporate plan, outlining its strategic goals and priorities over the next three years. One aim is to reduce waiting times for customers so that it is meeting customer demand “within acceptable time limits” by 2025. TPO is setting up a new team specifically to focus on reducing waiting times, and hopes to work with the pensions industry to reduce the number of complaints received.