RegulationOct 14 2019

How master trusts are regulated

  • Describe some of the bases on which master trusts will be assessed
  • Describe what happens to a master trust if it does not get authorisation
  • Identify what is needed to demonstrate financial competence
  • Describe some of the bases on which master trusts will be assessed
  • Describe what happens to a master trust if it does not get authorisation
  • Identify what is needed to demonstrate financial competence
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CPD
Approx.30min
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CPD
Approx.30min
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CPD
Approx.30min
How master trusts are regulated

All triggering events need to be identified and a formal resolution plan put in place should they occur.  Importantly, if they do occur they must now be reported to TPR. 

Fit and proper

All individuals being assessed must satisfy to TPR that they are fit and proper. This is done by evidencing that they meet the standards for:

  • Honesty, integrity and financial soundness
  • Competency (knowledge) and conduct

A declaration of financial strength, enforcement actions and criminal convictions will be required for each individual.

For trustees and strategists, TPR requires evidence of competence

Items such as statements of development, evidence of qualifications or learning programmes and other relevant experience.

Systems and processes

MTs must have sufficient IT systems and processes in place to run efficiently. 

In addition, they must have robust systems and processes to effectively govern the scheme and comply with all the relevant requirements.

MTs must confirm that their IT systems can provide a minimum functional capability, and be able to demonstrate it.

In addition, for functionality and maintenance of IT systems, TPR is looking at:

  • Administration of payments
  • Administration of records
  • Administration of transactions
  • Planning for change
  • Protecting data

TPR is also looking at evidence such as assurance processes, audits, and similar documents provided by service providers. Other factors considered include:

  • Trustee recruitment and standards
  • Trustee governance
  • Managing service providers
  • Risk management
  • Risk register
  • Planning resources effectively
  • Communicating  with members

Continuity strategy

Each scheme must report on how members’ interests are protected if a triggering event occurs. This is known as a continuity strategy.

There are a two possible continuity outcomes:

  1. Members' interests are best served by being transferred out to another solution and the scheme wound up. A scheme that is not authorised (in 2019), or is de-authorised, must follow this
  2. The triggering event can be resolved and the normal operations resumed.

It is worth noting that an MT cannot increase or introduce new member charges or take on new employers until an event has been resolved. In addition, the costs of the resolution cannot be passed onto members.

Scheme funder

The scheme funder must be able to demonstrate ability to provide the necessary support to the MT as and when required.

Scheme funders must provide accounts and other financial information to demonstrate their ability to meet the costs of the MT, including:

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