COMMENT


Regulator still sparing employersbreachingAE


By Josephine Cumbo


Tough talk from TPR on auto-enrolment breaches has translated into more action in recent years, but there are signs that the watchdog is still hesitant to use the toughest sanctions in its toolbox


W


hen it comes to bad bosses not doing the right thing by their staff, the Pension Regulator


likes to talk tough. In recent times the watchdog has


become more vocal on automatic- enrolment breaches, saying it will not tolerate employers and their advisers short-changing savers by not putting them into a pension scheme. This tough talk has translated


into more action, with a lengthening list of employers and trustees fined or facing prosecution for flouting their pension duties. However, there are signs that the regulator is still hesitant to use the toughest sanctions in its toolbox. A case in point is the watchdog’s willingness, or not, to name and shame big employers behaving poorly. TPR has the power under Section 89 of the Pensions Act to publicly identify employers it has taken action against. But it has shown a curious reluctance to fully exercise this power in cases where it would be justified in doing so. Arecent example involves one


large London-based employer landed with a £350,000 fine – the biggest ever imposed by the regulator – for failures relating to its duty to re-enrol staff into a pension scheme. In February 2017, the business,


whose name was kept secret by the watchdog, was issued with a compliance notice for not re-enrolling staff into the company pension. However, in October, around eight months later, an initial £400 penalty for re-enrolment


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failures had grown into a whopping £350,000 fine after the business ignored repeated warnings and let fines rack up at the rate of £10,000 per day. The re-enrolment issue was then settled, but that was not the end of the pension problems. In March this year, another compliance notice was issued against the same company for not paying the right pension contributions on behalf of staff. Following TPR’s intervention, the business made £100,000 of back payments into the staff pension scheme. In total, around 2,000 staff were affected by the re-enrolment and incorrect pension payment failings, which took place over a two-year period. All in all this was a poor show


froma big business – with 5,000 staff – that should have behaved better. When it revealed details of the


fine last month, the regulator said it was a warning to other businesses “not to put their head in the sand”. But in spite of this apparent overt abuse of rules, the company was spared the embarrassment of being publicly named. The watchdog should not have done so. Auto-enrolment had been in


place for five years at the time of the breach in 2017. There is little excuse for a large business – with advisers


and a payroll team – not to have its house in order when mostemployers are getting it right. This company had also repeatedly ignored warnings, and in doing so short-changed staff the pension money they were entitled to. This is a very serious failing. In its defence, the regulator said it


would not have been “appropriate or proportionate” to name the company in this case. It publishes the names of employers on its website in certain circumstances, such as if they had paid a fine but remained a rule breaker. The employer in this case had become compliant after paying the fine. This approach is need of an overhaul for several reasons. First, it has created a perverse situation where a big company, which ignored repeated warnings to comply and had racked up £100,000 of missed pension payments, is not named. Yet tiny employers, such as the Catford Cricket Club, are named on TPR’s website for less-extensive auto-enrolment breaches – Catford was fined £700. Second, not publishing details in


this case has limited scrutiny of the watchdog’s actions and decisions. Without full transparency, it is difficult to assess whether the fine was really meaningful for such a large employer with deep pockets. Suffice to say, slapping a £400 fixed penalty on such a large employer was hardly going to shift the dial in the first instance. A regulator that is under-


A regulator that is under- resourced should be making more effective use of its


resourced – in comparison with the 1.4memployers it has to police in the auto-enrolment space – should be making more effective use of its naming and shaming power to encourage better behaviour where it matters most: with big employers where reputation really matters. Charles Counsell, newly appointed


naming and shaming powers Josephine Cumbo, pensions correspondent, Financial Times


chief executive of the regulator, has said he wants savers to have confidence that their pensions are safe. Naming bigemployers who play fast and loose with the rules would be a good way for the watchdog to show who it is serious about protecting.


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