Final date set for Box Clever trustee and ITV showdown

The Pensions Regulator issued a financial support direction to ITV in December 2011, but a string of appeals have delayed the order’s implementation. The final appeal will now be heard next year.

Lawyers said the case – ITV Plc and Ors (Box Clever) v The Pensions Regulator [2012] – has sparked debate about the extent and flexibility of the regulator’s powers.

Box Clever, the sponsor of the scheme, was formed in 2000 after a merger between the TV rental businesses of Granada (now ITV) and Thorn (now Carmelite).

Granada had been able to extract £500m from the new business. Box Clever soon collapsed and its pension scheme was left stranded.

The fund is currently paying pensions at Pension Protection Fund level, although its formal transfer to the lifeboat cannot be completed until the outcome of the appeal is decided at a final hearing of the Upper Tribunal in the autumn of 2017.

An arduous process

Eversheds consultant Giles Orton, who represents the Box Clever trustees, said: “If ever there was a case for a financial support direction it’s this, where so much money was taken out by loading with debt.”

ITV previously stated that it had never participated in the Box Clever scheme, nor taken any dividend in excess of the sale price from the sponsoring employer.

The latest court disputes have revolved around whether the regulator accepts that there is no fault on ITV’s side, or whether it has simply chosen not to allege that ITV was at fault for its part in the collapse of Box Clever.

If the FSD is upheld, Orton said the broadcaster is likely to appeal again, in part because the regulator chose only to pursue Granada and not its joint venture partner Thorn.

The broadcaster is also expected to argue that the regulator, which was granted the power to issue FSDs in 2005, is trying to legislate retrospectively.

Chantal Thompson, pension partner at law firm Baker & McKenzie, said that while Box Clever’s case falls outside the regulator’s nominal two-year lookback, it can still grant an FSD provided it is reasonable to do so. “The argument in the current case seems to be around the reasonableness or otherwise of the regulator issuing an FSD against these companies,” she said.

ITV declined to comment on the case.

From regulator to supervisor?

The drawn-out nature of the case has raised questions over the efficacy of the regulator’s powers. By the time the final hearing is over, members and pensioners will have waited at least 14 years to find out at what level their pensions will be paid.

Mark Smith, pensions partner at law firm Taylor Wessing, said legal battles about FSDs are not uncommon: “The regulator’s financial support direction powers are complex and have their issues, which is why we have seen a number of court challenges.”

He explained that while the regulator has an ultimate responsibility to use its powers appropriately, parliament might be able to clarify its position.

“If the regulator is to have such powers at all – and there is now no stepping back from that – they need to be broad, to provide the regulator with flexibility to address a myriad different circumstances.”

The regulator did not comment on the ongoing Box Clever case, but at a Pensions and Lifetime Savings Association event last week, comments made by the regulator’s executive director for regulatory policy Andrew Warwick-Thompson hinted at a potentially more powerful role for the body in the future.

Speaking about the parliamentary consultations on BHS and British Steel, he said: “Some of the comments that have been made in front of the Work and Pensions Committee, and indeed by the Work and Pension Committee, seem to indicate that there may be an appetite for us to become less of a regulator and more of a supervisor, which is actually setting rules and standards.”