Opinion  

Regulation remains reactive rather than proactive

Emma Ann Hughes

Emma Ann Hughes

I would argue the Queen’s Speech showed the leaders of our country still can’t spot a potential scandal even when the whole industry is hollering and pointing their finger at another grey cloud on the horizon.

In the last few years, the UK’s government has shown it likes to bring in sweeping changes to the financial services industry.

Automatic enrolment is to great for encouraging more people to set aside cash for later life and pension freedom should be celebrated for delivering greater choice of what to do with savings pots when it comes to retirement.

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But both these bright sparks from government have also ignited dodgy dealers to try and find ways of using this shake-up of the pension landscape as a way to pillage savings pots.

The Queen’s Speech showed almost a decade after the credit crunch our government – and the regulation it churns out – continues to be cause and then be reactive rather than proactive in preventing catastrophe.

The speech finally delivered stricter criteria for master trusts.

Those working in the pensions industry have been calling for tighter scrutiny of master trusts for ages.

Low entry barriers meant 70 master trusts – not one of two but 70! - have been set up in recent years, according to Kate Smith, head of pensions at Aegon.

All of these master trusts were looking to benefit from automatic enrolment and the concern was that not all of these schemes have the right resources, controls and governance in place to succeed.

Ms Smith said: “The fear is if master trusts wind-up, costs might be taken from the members’ funds wiping out their pension savings, through no fault of their own.”

Why has the government allowed it to get to this scale of a problem before taking action?

Now The Pensions Regulator will have new powers to authorise and supervise master trusts entering the market.

Why didn’t the regulator have the powers to ensure master trusts will deliver for pension savers before now?

What is even worse than the snail-like pace of this government in noticing a potential calamity regarding master trusts roaring into view is what the Queen’s Speech failed to contain.

Where was a clampdown on so-called pension liberators, who are in fact scammers?

At the end of 2015 campaign group ACA Pension Life has said the government is “ultimately responsible” for the potential loss of billions of pounds of savers’ pensions by refusing to “fix a broken system”.

The group, which aims to rescue victims of pension liberation scams, announced it had dealt with pension scheme members who have lost more than £20m across 13 schemes, with total losses in excess of £2bn.

HM Revenue & Customs has strengthened its registration procedure to prevent new schemes being set up to facilitate scams and can impose sanctions and de-register schemes that break the rules.