What will Lesley Titcomb's legacy be?

Those who believe the outgoing chief executive of The Pensions Regulator (TPR) has done a fairly good job with the baton she was handed, say that under her leadership TPR has won many cases and has managed to get more employers to pay into pension schemes. One notable win was ex-BHS owner Sir Philip Green paying £360m into the pension scheme.

The regulator has also been overseeing the auto-enrolment regime and has fostered a much closer working relationship with the Financial Conduct Authority (FCA) a consequence perhaps of Ms Titcomb’s time with the City regulator as chief operating officer.

However, her leadership has also come under criticism.

Ms Titcomb, who is set to leave in nine months, previously told Financial Adviser in an exclusive interview her decision was a personal choice and was not triggered by any pressure from MPs. 

In a letter last month to Mark Boyle, non-executive chairman of TPR, about the collapse of construction firm Carillion, Work and Pensions Committee chair Frank Field took aim at Ms Titcomb.

He said: “The report [from TPR] concluded while there is a desperate need for the regulator to be quicker, bolder and more proactive, this will require substantial cultural change in an organisation where a tentative and apologetic approach is ingrained. We are far from convinced that TPR’s current leadership is equipped to effect that change.

“In evidence to us, the current secretary of state confirmed her desire to see a regulator that is tougher, clearer and quicker." 

Clearly a reproval aimed directly at Ms Titcomb herself, but are Mr Field's criticisms justified?

When Ms Titcomb took the helm at TPR in March 2015, businesses were in full recovery mode following the outbreak of the financial crisis of 2008, while government was devoted to making the economy buoyant again.

Key points

• There is little agreement on how much culpability Lesley Titcomb should carry for the 'underperformance' of The Pensions Regulator.
• There is a suggestion that some of TPR's powers may have been overestimated.
• Other industry figures think TPR should have more powers.

According to Sir Steve Webb, a former pensions minister in the coalition government and now director of policy with Royal London, if the regulator at that time had demanded more money be put into pensions schemes, it is highly likely the government would have said no, because of the focus on creating more jobs.

He said: “That’s a permanent tension and that particular pendulum swung in the jobs direction.

“When Lesley arrived the focus was very much ‘don’t go too hard on the employers’ and then of course when you get BHS or something like that, you get all the media pressure saying, why did you not go hard on the employers?

“And now all the pressure [has led to] a defined benefit green paper, a white paper, or a manifesto commitment on things, like making it a criminal offence to wilfully underfund your pension scheme or new powers for the regulator.”

At the start of Ms Titcomb’s reign, auto-enrolment was also in its early stages, with the vast majority of employers yet to begin the process. Defined benefit (DB) scheme deficits have grown owing to the dramatic fall in gilt yields. 

Mr Webb said: "I think TPR, probably years ago, should have done more to support the trustees of Carillion, but bear in mind we are talking years before Lesley got there." 

Some unrealistic expectations of TPR may have also been introduced as a result of the scope of its powers being overestimated, “and also of its resourcing capability to monitor all DB schemes in the way that detection of Carillion’s problems would have required,” according to the former pensions minister Baroness Ros Altmann.

“TPR relies on warnings from trustees to alert it to problems, but if trustees aren’t scrutinising employers in detail, then the early warning system will not work as it could.”

TPR's day job is regulating trust-based pension schemes, while the FCA oversees contract-based schemes.

Ms Altmann said TPR does not have sufficient powers to demand the information it needs to monitor schemes and pick up on any early warning signs of potential problems. It can only gather information once it has launched a formal investigation.

Otherwise, it is only able to request data. The FCA has stronger powers to require information to conduct its investigations.

Mr Webb added: “TPR has to know how trustee boards work and how employers think, much more. If the FCA passes a rule it can have statutory force, like passing a law.

“TPR does not have the power to do that. It can put out good practice guides and wait for the government to create new primary legislation. It does not have that same sort of delegated power and that makes it slower to react.”

Saying that, Mr Webb, who hired Ms Titcomb when he was the pensions minister, does acknowledge that TPR needs to improve.

Since joining the regulator, Ms Titcomb’s tenure has been blighted by three big company crises: British Steel, and the collapse of Carillion and BHS.

Mr Webb said: “TPR would accept that probably they should have moved faster in a number of cases. In the case of BHS, the negotiations over the recovery plan took a very long time. The submissions to the regulator were late and not chased quickly.

“They would accept they need to tighten up their act.”

In a letter to Ms Titcomb in March, Mr Field said while it was calling on the government to give TPR more powers, it did not believe additional powers alone were sufficient for the regulator to turn its performance around.

He said: “In our BHS report we found that TPR had been reactive and slow-moving. In our subsequent report we concluded that regulatory intervention tended to be concentrated at stages when a scheme is in severe distress or has already collapsed. I am sure I do not need to draw your attention to how opposite this is in the case of Carillion.”

Al Rush, principal at Echelon Wealthcare, who has been dealing with TPR over the British Steel case, criticised the regulator for its apathy towards the situation, particularly when the scale of the crisis began to emerge.

He said: “When I first got in contact with them and explained what was going on with British Steel, they were just not interested and I really had to thump the table hard to get anywhere.”

Mr Rush is, however, somewhat sympathetic. He does not believe the public fully understands the role of TPR and he believes this is an area they need to clarify.

But more than that, it needs to be more proactive within the confines of its powers, particularly as the future for some DB schemes remains uncertain.

Mr Rush said: “It’s all very well saying she inherited some problems, but whoever takes over from her will inherit problems that could have been addressed in the past and I wonder if TPR is well placed to cope with the challenges over the next few years and, if it is not, then that is a valid criticism that could be levelled at her.”

As the government starts its recruitment drive it will need to look for someone it believes is strong enough to lead.

Meanwhile, Mr Webb says with the next head the committee should focus more on the organisation and its performance, rather than fixating on the individual in charge. 

Ima Jackson-Obot is a features writer for Financial Adviser