Robin Ellison
In the latest in his series of monthly columns for Professional Pensions, Robin Ellison discusses a change in mood about regulation.
England isn't really a country for revolutions; it's just too miserable to go campaigning in the damp. The last real one was the Civil War, not far off 400 years ago, and itself partly about over-regulation. Nonetheless, the recent extended spell of rainy weather doesn't seem to have affected a rather unexpected series of pushbacks against excessive regulation by over-zealous regulators. There are several of these straws in the wind. To mention just four:
Pushback number one is the financial industry's response to the Financial Conduct Authority's decision to ‘improve transparency' in the companies it is investigating, even if the investigations lead to nothing – their so-called ‘name and shame' plan. UK Finance, the club of banks and insurers have unusually taken umbrage as have parliamentary select committees and MP's (UK Finance CEO: FCA's name and shame plans will harm UK competitiveness, City AM, 30 April). Even the Chancellor of the Exchequer has been critical of the FCA's approach (Financial Times, 1 May), and the last time that happened the FCA's predecessor (the Financial Services Authority) was disbanded. It looks like the FCA may have taken a step too far.
Pushback number two is The Pensions Regulator's (TPR's) proposal that pension funds should publish strategy statements. Elements of the pensions world have unusually resisted the proposal for an additional requirements which is seen to have little purpose, especially as the movement as a whole is enjoying a period of substantial surpluses. It is perhaps the first time the industry has almost universally complained about the principle rather than merely about the detail (see, among many others, TPR's statement of strategy proposals raise 'grave concern' among industry, Professional Pensions, 15 April). It looks like TPR may have taken a step too far.
Pushback number three is that of Solicitors Regulatory Authority (SRA) which had lost a case against a solicitor in the Disciplinary Tribunal and had costs awarded against it (SRA fights costs order in lost SDT prosecution, Law Society Gazette, 24 April). Like Mr Trump, it is a poor loser; having lost, it then complained. The SRA has certainly taken several steps too far.
Pushback number four is that of Margaret Snowden who is campaigning against the unreasonable behaviour of HM Revenue & Customs (HMRC) when it imposes tax penalties on individuals who have had their pensions stolen by scammers, in a movement called Enough is Enough. HMRC may have the right to do what they do, but it does seem grossly unfair; their argument is that individuals should have read the HMRC guidelines before seeking to access their money. HMRC is clearly behaving harshly.
Rethinking regulation
Regulators across the board may need to (or should) rethink how they behave, in both their tone and their reach, given the change in the mood of the public and of government. A report by Tom Clougherty and Robert Colvile from a think tank last month (The Future of Regulation, Centre for Policy Studies, April 2024) showed that the cost of regulation increased significantly during the 2010s – despite repeated promises from government to shrink the regulatory burden. In financial services the ratio of regulators to workers has increased from 11,000 to 1 in 1980, to 300 to 1 in 2011 and to 75 to 1 in 2023. As Liz Truss might say, amazeballs.
If we put this into an Excel graph, by 2030, there could be more regulators than workers. The ratio in pensions regulation may be even worse. Meanwhile the good news is that Gill Furniss (wake up at the back there) has resigned as shadow pensions minister; she replaced Matt Rhodda (ditto) only eight months ago. The lives of shadows seems even shorter than the real ones. If we have a change of government maybe we could live without a pensions minister at all, especially if a new government needs to save some money. Meanwhile it is clear, as a recent report points out, that government is not happy with the way that regulators are behaving and they will need to improve… and that doesn't mean getting more zealous (see: Parliament and regulators: how select committees can better hold regulators to account, Institute for Government, April 2024).
TPR transparency: them and us
Perhaps the FCA could have a word with TPR about TPR's own transparency. Summaries of its board meetings on its website seem to have been discontinued since last September. It doesn't matter that much, since there was nothing in them that disclosed whether there had been real debate about policy or strategy, nor what was in any supporting papers. Obviously, discussions about individual schemes or people should be redacted, but TPR board members should be mildly embarrassed that they do not practice what they preach. Even the Bank of England's Monetary Policy Committee publishes its full minutes a few weeks after its meetings, and its stuff is even more sensitive.
TPR and sex (1): diversity, sex working and auto-enrolment
Diversity is one of the objectives of TPR, though more for trustees than for itself; while it points out that 9% of trustees are under 45, compared with 52% of the wider population (Pension boards lack diversity but not the desire to improve, TPR survey shows, The Pensions Regulator, 19 March). Meanwhile, it looks as though 0% of TPR board members/ executives are under 45. It's probably normally best to lead by example to avoid charges of hypocrisy.
Diversity is not of course just a matter of age. Press reports a week or so later showed there is considerable discrimination against sex workers in the UK (Sex workers accuse banks of waging ‘war' on them by blocking accounts, Financial Times, 17 April), few of whom seem to sit on pension trustee boards. And there are unintended consequences for the way banks behave. As well as the shame of being treated like Nigel Farage, the FT noted: ‘It is life-threatening to sex-workers to lose their bank accounts. . . when someone cannot have a bank account to hold their money independently, they are more likely to rely on a third party to hold their money for them, such as a partner who could potentially then abuse or exploit them.' Barclays refused to comment; more disappointingly the FCA, which really should have a policy on this, also declined to comment.
TPR is not so far involved in the issue, although it might be useful to have a TPR statement on the way they are approaching sex-workers in relation to auto-enrolment (see: Sex work as work, Global Network of Sex Work Projects, 2016). Although they are all liable to pay income tax, most of course are sole traders. There are over 72,000 sex workers in the UK, around 88% of whom are women. Meanwhile the Crown Prosecution Service uses outdated and demeaning terminology in its statement of practice (see: https://www.cps.gov.uk/legal-guidance/prostitution-and-exploitation-prostitution, 2019), which hopefully TPR will not.
Regulators and English
The Department for Environment, Food & Rural Affairs (DEFRA) can now fine anyone who keeps a chicken at home, even as a pet, £5000 for each unregistered chicken for failure to register it. Who knew? The form is here; it uses the term ‘50 chickens or less'. The idea is to control bird flu, which is a genuine plague, but it does not apply to swifts and other migrant species, even if they nest in the garage and carry disease. Rather embarrassingly even migrant birds understand the difference between ‘less' and ‘fewer'.
TPR and sex (2): smoking and eating
The progressive outlawing of the sale and purchase of tobacco (and herbal) products may have some unintended consequences (Tobacco and Vapes Bill 2024). There doesn't appear to be any exemption for the arts, so that Poirot, Maigret, Sherlock Holmes and Winston Churchill may have limitations on their future appearances in film and on stage.
Smoking is a filthy habit of course, but the reason the Act is curious is that it appears to be one of the few state interventions that are designed to protect an individual rather than protect individuals from harm by others. It is not unique; motorcyclists must wear helmets, we all must wear seatbelts (even in the back of the car) and certain sexual activities even between consenting adults are illegal (see R v Brown [1994] 1 AC 212 (SC) in relation to sado-masochism). Enforcement may become an issue, with the remaining smokers amongst us having to show documentary evidence of date of birth. There is a good private health reason for the ban, of course; each year around 70,000 of us in the UK die before we normally would, from smoking. But our afflictions do not harm third parties. The growing ban may eventually affect buy-out costs.
Nonetheless we could do with more laws preventing people from hurting themselves; as the lead judge said in Brown: 'Society is entitled and bound to protect itself against a cult of violence. Pleasure derived from the infliction of pain is an evil thing. Cruelty is uncivilised. I would answer the certified question in the negative and dismiss the appeals of the appellants against conviction.' Although oddly, boxing still seems to be legal as do other martial arts, and of course surgery, which does occasion actual bodily harm.
Similarly, the food czar who resigned some time ago (see: Henry Dimbleby, Ravenous, Profile Books, 2023) noted that around 30,000 of us die from obesity each year. He resiled from suggesting rationing, but that was the subtext of his book. So maybe we need some legal controls through a rationing app on our smartphones to limit consumption of chocolate (1 x 200g bar of fruit and nut a week), hamburgers (1 per month, whether at home or from eating out) and crisps and Pringles (on prescription only). And there should be bans on horse riding (riskier than taking ecstasy) rock climbing (falling off) and round-the-world sailing (storms and pirates). More accidents happen in the lounge/living room than anywhere else in the home; the cost to society of UK home accidents has been estimated at £45.63B a year (ROSPA). Meanwhile the biggest financial risk for most of us has been regulation. The move to bonds forced on trustees by regulators has cost us all a lot of money.
And just to mention, irrelevantly, the police can in some cases impose a ban on music, such as Ravel's Bolero. The legislation (Criminal Justice and Public Order Act 1994 s63–67) allows the police to prohibit any gathering of 100 or more people where (63(1)(b)) there is music played, which includes ‘sounds wholly or predominantly characterised by the emission of a succession of repetitive beats'.
Movies and regulation
We have been following the tragic story of the film camerawoman who was shot by accident by Alec Baldwin on a film set. Meanwhile Ruben Ostland, a film director (Triangle of Sadness) suggested in an interview that anyone planning to use of movie camera should need a licence, like a gun owner.
TPR Going Green
TPR is now committed to reducing its operational emissions in relation to gas, electricity, business travel, water and waste by at least 90% by 2030, and net zero by 2050. But it is not clear whether that is related to size; if it doubles its workforce does the emission count rise or is it marked to today's date? And are strike days taken into account? Meanwhile no statement on its meeting government policy on one-in, three-out, which might really save some emissions.
Back on risk management
It is in the nature of regulators to tell us what to do and how to do it; they know beyond a peradventure that we know less than they do and that we are dedicated to the destruction of those in our charge. Yolanda Díaz, one of Spain's deputy prime ministers, during the 2023 election campaign arranged to be filmed doing the ironing. ‘I love ironing. I spend hours, almost every day ironing. When I get home from work I iron my clothes and everyone else's.' We should all give her a ring, but where does she find the time? As Labour Minister in Spain's minority left-wing government she later suggested that Spanish restaurants should close earlier: ‘It's madness to carry on extending opening times; a restaurant still open at 1 o'clock in the morning is not reasonable', she declared. ‘After 10 o'clock at night the working hours are nocturnal and, therefore, have certain risks. They have mental health risks' (Is Spain's late-night lifestyle a precious part of our culture – or should we be more like sensible Sweden?, The Guardian, 15 March; and Do Spaniards have the right to eat in restaurants at midnight?, Spectator, 10 March 2024).
Meanwhile one of the major causes of death and injury in the home in the UK is older people using ladders and step-stools, and falling down stairs. One solution might be to make it compulsory for older people to live in a flat rather than a house to reduce such injuries and to make it illegal for them to use a ladder to change a light bulb or clean the gutters. We need The Pensioners' Regulator (TPR) to set down guidelines and make it obligatory (with a £400 fine for breach) for old people (ie over 55) to report annually that they're living in stair-free accommodation and if not why not.
Regulatory overload
There are increasing references to ‘regulatory fatigue' sometimes recognised by regulators including TPR. But we could be forgiven for feeling some despair when looking at the amazing catalogue, Regulatory Initiatives Grid. In November 2023, the FCA published a list of expected changes over the next two years. The list, just the list, is 64 pages long. Merely to open the file induces despair. A book published in the United States (Benjamin Van Rooij and Adam Fine, The Behavioural Code: the hidden ways the law makes us better or worse, Beacon Press, 2021; a brilliant work which should be on every TPR Board Member's reading list) complains about regulatory overreach, as does an inquiry into the regulatory creep by the Legal Services Board with commentators asking what does it have to do with ESG or even have any knowledge (see eg https://www.legalfutures.co.uk/latest-news/law-society-climate-change-a-valid-reason-to-reject-clients). Meanwhile both the FCA and TPR are behind the curve on ESG; Minnesota has decided to abolish references to ESG, not because it thinks it woke, but because a more useful phrase is sustainability.
Robin Ellison is, among many other things, the chairman of the College of Lawmakers, a retired pensions lawyer, a visiting professor in pensions law and economics at Bayes Business School, City, University of London and chair of several pension funds
