Enforcement strategy, policies and procedures

It might just be me, but whenever you get something new, it can make you look at other stuff you have, and think about whether it needs fixing, refreshing, or replacing – or whether you need less of it or even need it at all and can throw it out altogether.

The Pension Schemes Act (PSA21) gave us a number of important new powers and broadened the scope of some of our existing ones.

This presented us with an opportunity, not only to think about how we might deploy those new powers, but also to reflect on our use of our other enforcement powers to date and what we want to achieve in the future based on our wider corporate priorities.

In particular, it made me think about how we have strived to be more transparent in recent years, both about how and why we do things. I wanted to us to be transparent about how we intend to deliver the goals set out in our corporate strategy, in particular around security for savers and bold and effective regulation.

When PSA21 came into force we consulted on a number of new policies to provide guidance and clarity over how we expect to use our new powers.

Feedback from stakeholders also highlighted a need to be more transparent with our regulated community about what to expect when they are the subject of our enforcement action. This was really helpful in reinforcing the benefit of undertaking a thorough review of the information we have published to date.

This made us take a step back and think about whether our compliance and enforcement policies, put in place some years ago, were still fit for purpose and whether they reflect how we operate now.

Since the Pensions Act 2004, various new powers have been given to us over successive rounds of pensions legislation and our compliance and enforcement policies have also tended to develop in this way, as separate documents in line with our new powers.

But in recent years, our enforcement approach has become more streamlined and consistent following operational changes. In particular, now we have a dedicated enforcement team. (This is separate to our enforcement work in relation to automatic enrolment duties, which is undertaken by another dedicated team).

So, we took the opportunity to look at the old with new eyes, and see what we could fix, refresh, or replace in terms of our policies. We asked ourselves, what would an updated, accessible and comprehensive policy look like today, if we were to produce one as a “single source” of information on how the enforcement team operates?

The enforcement journey

Our new enforcement policy aims to do just that. It has replaced and consolidated three of our compliance and enforcement policies, on DB Funding, DC and PSPS schemes. Our policy is now web-based and divided into standalone chapters, each with links to other relevant material, such as codes, policies and procedures.

We also wanted to be able to show what an ‘enforcement journey’ might feel like, whether the context is a DB, DC or a Public Service pension scheme, starting with the outcomes we might pursue, then showing how we might go about achieving them, in pursuit of our goal to improve safety and security for pension savers.

So we are pleased to have published the final version of this policy with our updated prosecution policy and consultation response setting out the feedback we received and, where relevant, how we have adopted this.

We have provided further clarity, including case examples, where possible but have reiterated that we adopt a principles-based approach focusing on the risk and harm factors in deciding which enforcement cases to pursue. We were pleased to receive positive feedback on the new modular layout of the enforcement policy, which should make navigation to the relevant pages on our website much easier.

Our enforcement powers are one of a number of tools we use to help ensure the safety and security of pension savers’ benefits and also instil confidence in pensions saving.

They are our powers which can be said to have the most “bite”, so they naturally (and rightly) engage a lot of wider public interest, whether from the perspective of our regulated community, industry, a target or a person affected by our enforcement action or interested in the outcome or the press.

And because of that, we are really grateful that so many of those interested parties and stakeholders took the time to provide us with their thoughts and ideas on all our draft documents, in this and each earlier consultation. Their contributions genuinely assisted our thinking and helped shape each of the finalised strategy and policy documents and motivated us in our goal to be as transparent as we can be.

Strategic enforcement goals

We also wanted to clearly set out what our goals are for our enforcement activity as a whole in driving our corporate priorities and reiterate our focus on outcomes and improving safety and security for pension savers, in line with our corporate strategy.

So it is with some pride that I can say that we have also published our Enforcement Strategy, which sets out the aims of our enforcement work (excluding our automatic enrolment function). This provides an insight into the overarching framework we apply when selecting cases for enforcement actions and our aim of achieving one or more of the following outcomes from our work: Prevention, Remedy, Restoration and Deterrence.

While our new strategy, and these policies, are not a fundamental change in our approach, they give a clearer understanding of the enforcement journey and factors we will take into account throughout the life of a case.

To further assist in providing clarity, we are also today publishing updated and more accessible versions of our Case Team and Determinations Panel procedures which set out the steps we will follow when considering using our “reserved” powers, which require referral to the Determinations Panel.

Our work in enforcement is constantly evolving as we take on more cases and test new powers. We continue to be transparent in the outcome of our cases through our publications and will revisit our strategy and policies if these outcomes require any changes in our approach.

By Erica Carroll
Director of Enforcement