Working to a higher standard
16th May, 2019
Vassos Vassou of Dalriada Trustees welcomes the new standards expected of professional trustees.
New professional trustee standards were published at the end of February. At the heart of both the process that preceded the publication, and all the follow up since, has been a drive by The Pensions Regulator to improve the quality of trusteeship.
The new standards were prepared by a working group comprised of members from across the industry: professional trustees at firms as well as sole traders, the Association of Corporate Trustees, Association of Professional Pension Trustees (APPT), the PMI, the PLSA and the Regulator. All these parties have similar but different views on professional trusteeship and bringing these views together has led to the new standards.
From my perspective as a professional trustee, I’m very keen for trusteeship standards to be driven upwards and I’m sure that members in my schemes share this goal.
What do the new standards require?
- It almost goes without saying that professional trustees should be fit and proper (in line with the DC Mastertrust requirements) and act with competence and care. There will be an accreditation process to ensure professional trustees are up to these minimum standards, both at the initial application stage and each year on renewal. This accreditation process includes an initial technical exam and soft skills assessment, followed by annual CPD requirements.
- There are new restrictions on sole trusteeship with firms required to meet audit standards and sole traders excluded from acting as sole trustees. Process and trail are at the forefront of the sole trustee requirements.
What will these changes mean in practice?
- The Regulator will now be able to collect data on pension schemes and the professional trustees that support them using its Exchange database. It can find out if the professional trustee on any scheme is accredited. If not, why not? The Regulator will be able to use this data to support future changes in governance requirements.
- The Association of Professional Pension Trustees (APPT), will have ownership of the standards going forward and will have the power to “discipline” accredited trustees if their work is not up to scratch. This will include removing the professional trustee’s formal accreditation.
What about the professional trustees working up and down the country?
- There is no requirement to become accredited, but for those trustees already performing the job well, I believe the accreditation is straightforward. Indeed, the Regulator is more likely to prefer that trustees are accredited. The standards are, however, a deterrent to poor trustees.
- It will be more difficult to “dabble” in pension trusteeship on some sort of minority part-time basis, where this important work is treated as nothing more than some sort of cottage industry. This may potentially result in some professional trustees exiting the market. We will begin to see more and more appointments sanctioned on an accredited basis. And rightly so in my opinion.
- Pension trusteeship is now beginning to look like any other profession: recognised exams, CPD requirements, fit and proper requirements, disciplinary processes and ongoing accreditation. This can only be positive for those working as professional trustees and the pension scheme members they serve.
And finally … Looking ahead, the Regulator is planning to consult this summer on a new Code of Practice. Rumour has it that the consultation will seek views on appointing an accredited professional trustee on all pension schemes. If this were to happen, the industry will need many more professional trustees who will now need to meet the new professional standards.