Martin Tilley: Why SSAS regulation is needed

As you may know, I am a staunch believer that there should be some form of regulation introduced in respect of SSAS – my preference would be for all SSASs to require a professional trustee to ensure that the governance, understanding and administration of each SSAS is undertaken correctly ensuring legal compliance and offering the best platform for savers to succeed in their financial goals. This type of regulation would also allows the weeding out of the small number of ‘bad actors’ in the industry who may be bending the current rules for nefarious reasons. The debate has long been had over which body should be the regulator of SSAS. Should it be the FCA? They already regulate SIPPs and there are obvious crossovers with SSAS, although I’d suggest they do not currently have all the skills to so effectively. The extent of any oversight would be extensive and expensive and the SIPP world is still undergoing a review of its own regulation (DP24/3). The Pensions Regulator (TPR) confirmed in a statement on 2 April that they will be introducing a new framework for oversight of professional trustees. The rationale behind the new rules is to protect savers, and there was an acknowledgement from TPR that the professional trustee market has experienced ‘substantial growth’ in the last few years. TPR’s aspiration is to move to a more ‘prudential style’ of regulation, allowing them to address risks and challenges as a systemic and scheme level. The announcement also made reference to TPR’s ‘new risk-based and outcome-focused approach to regulation.’ The areas included in the new framework are: ownership structure, skills and experience, knowledge and understanding, diversity, equality and inclusion, conflicts of interests and fees. There appears to be alignment with the new framework and the FCA’s Consumer Duty regulations, introduced initially in 2023. These regulations were also introduced to improve customer outcomes. TPR plans to consult with some of the largest workplace pension providers over the course of the summer to establish what risks are presented to consumers, and also what mitigation steps might be required. Importantly, TPR will also be using this opportunity to establish best practice with a view to increasing standards across the industry and also improve consumer communications. The first wave of TPR’s plan will include large workplace schemes – initial reports suggest that SSASs are not included at this stage. The TPR Professional Trustee description policy clearly excludes SSAS. However, it strikes me when reading TPR’s accompanying report that this seems to be a precursor to regulation for SSAS. The role of a SSAS trustee is nuanced and sometimes challenging and requires more than a base understanding of trustee law and rules. Currently, anyone can become a SSAS trustee as long as they are ‘fit and proper’ under HMRC criteria and profess themselves to be. However, without validation or analysis, there is no guarantee that non-professional scheme administrators and trustees are truly able to effectively discharge their obligations. Time will tell as to whether the recent announcement from TPR is going to transition its new wave of regulation to SSASs and whether, as a result, we see a return to the pensioneer trustee or some kind of accreditation process for trustees. I suspect it may well do, with SSAS regulation introduced in the next couple of years. SSAS is an extremely valuable and effective retirement solution for some clients, and I do hope that any regulations introduced do not significantly limit the flexibility that SSASs offer. Additionally, there is the matter of cost. After the General Levy furore last year, it’s essential that the cost of regulating a SSAS does not become significant and act as a barrier to consumers or have the unintended consequence of reducing competition as well as driving up costs among providers in the marketplace. Martin Tilley is chief operations officer at WBR Group martin.tilley@wbrgroup.co.uk

Martin Tilley: Why SSAS regulation is needed

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