10 May 2018
Royal Assent for the Financial Guidance and Claims Bill starts the countdown for the cold-calling ban
The Financial Guidance and Claims Bill should receive Royal Assent today (10 May). Its prime purpose is to establish the new Single Financial Guidance Body to replace the Money Advice Service, Pensions Advisory Service and Pension Wise, but it also contains the necessary provisions to enable the Government to proceed with its cold-calling ban.
The new body will be officially named in future regulations and will start operating sometime after autumn 2018.
As far as pensions are concerned the new body has a “pensions guidance function” which is to “provide, to members of the public, information and guidance on matters relating to occupational and personal pensions”. As part of this function, the body must provide information and guidance for the purposes of helping a member of a pension scheme, or a survivor of a member of a pension scheme, to make decisions about what to do with the “flexible” (broadly money purchase or cash balance) benefits that may be provided to the member or survivor.
The Act also contains the following:
- A requirement for those running personal or stakeholder pension schemes, or providing flexible benefits within occupational pension schemes, to ask members or their survivors at the point at which they require access to or transfer of their pension assets, if they have received information and guidance. These requirements will be fleshed out in FCA rules for those running personal or stakeholder pension schemes and by DWP regulations for those running occupational pension schemes. It is not clear from when these requirements will come into force
- Provision for regulations to be laid before Parliament “prohibiting unsolicited direct marketing relating to pensions”. If before the end of June in any year the regulations have not been made, the Government has to publish a statement by the end of July explaining why they haven’t and setting out a timetable for making the regulations. The Information Commissioner and the telecommunications regulator, Ofcom, will have a role in policing the ban
The last of these provisions concerns the much awaited “cold-calling ban” on which details remain scant. We hope that the regulations enacting the ban will be well thought through and effective in ending this blight on pension scheme members. However, we are concerned that it seems the regulations are likely to be made in haste without any form of public consultation.
The Regulator contemplates asset seizure
The Pensions Regulator has announced that it is to appoint High Court Enforcement Officers (HCEOs) to enforce court orders in England and Wales, and their equivalent in Scotland and Northern Ireland, on those employers that have refused or failed to comply with workplace pension fines.
The Regulator says that although the need for this has been driven by a tiny minority of employers who not only ignore their automatic enrolment duties but fail to pay their fines, even after the courts have ordered them to, this mechanism can also be used to collect payment for other fines or levies issued by the Regulator that trustees or trust managers fail to pay, such as for the DC chair’s statement and scheme return offences.
HCEOs can visit business premises to remove items to sell, to the value of the amount owed. This could include the employer’s vehicles. Unlike bailiffs, these officers have the power to force entry to locked commercial premises to seize assets.
Despite fears of increasing non-compliance as the auto-enrolment policy rolled out to smaller and micro employers, it has been a huge success story. However, for the policy to stick, the few that do not comply cannot be allowed to get away with it, or be seen to get away with it. The Regulator hopes that HCEOs will rarely be used, but clearly has felt the need to signal to the market that there is no hiding place.
It will be interesting to see who first falls foul of these powers that the Regulator has had for some time, but not needed to exercise. Will we in future see a company boss have his much prized car driven away and auctioned off because of auto-enrolment shortcomings?
HMRC announces more delays along with a U-turn
HMRC’s latest Pension Schemes Newsletter contains, amongst other things, the now familiar announcements of further delays in delivering various services, along with a U-turn on how schemes should go about meeting their registration duties under certain money laundering regulations that came into force last June.
On the first of these:
- The launch of “Manage and Register Pension Schemes” has been delayed until 4 June 2018 and consequently the soon to be replaced “Pension Schemes Online” service will remain open until 6.00 pm on 1 June 2018
- The annual allowance calculator remains unavailable whilst HMRC addresses the errors contained within it
- HMRC now hopes that the additional member functionality for the lifetime allowance online service will be available in the next couple of months; and that the problem of P6 tax coding notices being issued in error for death benefit payments that are entirely non-taxable will be addressed by the summer
HMRC’s U-turn in relation to the money laundering regulations is very significant. Pension schemes will no longer need to register with the Trust Registration Service introduced last year under these regulations when they have incurred a UK tax liability. Instead (and somewhat oddly phrased), the scheme’s details can be updated by contacting Pension Schemes Services. HMRC promises to publish more guidance on this and update everyone by means of a later pension schemes newsletter.
Pension Schemes Newsletter 98 also contains various administrative requests and updates relating to the operation of relief at source for Scottish income tax and an update on the interaction of pension flexibility payments and Scottish income tax.
Our understanding from guidance yet to be published by HMRC (but made available to interested parties) is that schemes will be able to use Pension Schemes Online (and its successor) to pass information to HMRC when they incur any tax liability that until now would have required them to register with the Trust Registration Service. This is good news, but it is highly frustrating that it has taken until now for the various parts of HMRC to realise that they were imposing a completely unnecessary dual reporting burden on pension schemes.
Will the DWP’s White Paper lead to safer pensions?
LCP is putting on a breakfast briefing on 5 June 2018 that will look into the content of the DWP’s White Paper and the Regulator’s annual funding statement and consider the following questions:
- What is the new pensions regime likely to look like in 2021
- Will DB pensions be safer as a consequence
- What might this mean for trustees in the meantime
- What might this mean for corporate sponsors and shareholders
If you would like to attend please register here.
This Pensions Bulletin does not constitute advice, nor should it be taken as an authoritative statement of the law. For further help, please contact David Everett at our London office or the partner who normally advises you.