Named and shamed: Should trustees publicly criticise service providers?

He had criticised a column in which Kellaway needled, among others, HP’s chief executive for saying “daft” things in her speech at the World Economic Forum.

The rising prevalence of social media has led to a huge increase in people publicly criticising companies, institutions and people they feel have been disingenuous, misguided or just plain incompetent. One only needs to look at the timelines of train franchisees during the morning or evening commute for evidence.

Social media can present its own risks and considerations – but is publicly taking people to task ever an acceptable approach for pension schemes? Or do trustees risk damaging relationships and making themselves look foolish?

Roger Mattingly, director at professional trustee company Pan Trustees, says transparency around what companies are good to work with is useful, but said there is a “sensitivity” when it comes to public criticism.

“It could be quite damaging,” he said. However, he added there is “a lot of discussion, networking and word of mouth that goes on anyway,” especially among independent trustees, so providers that are failing to give schemes a good service could quickly find themselves short of business as word gets around.

Where a scheme did need to raise issues with a provider, he said, “you’d have to be very objective in how it was done. Otherwise, you could trigger a backlash”.

Ultimately, Mattingly said: “In a theoretical and ideal world it could make a lot of sense, but in the real world it could be damaging,” adding the level of dialogue between pension professionals means “organisations that think they’re getting away with underperforming aren’t, and are at risk of reputational damage.”

Richard Butcher, managing director at professional trustee company PTL, said: “It has happened. In the past there have been a couple of headline cases relating to asset managers not doing what they were supposed to, so they litigated against them. It doesn’t happen very often.”

Growth of social media

He said with the rise of social media, members could ultimately become more vocal about airing grievances with both providers and their scheme.

“I could see pension members doing that,” he said, adding it is unlikely to become common practice among pension professionals. “It’s not going to be very common, because it’s really quite an incendiary way of doing business.”

Behind closed doors

Michael Chatterton, director at professional trustee company Law Debenture, said schemes should look to resolve any issues with providers privately.

“You should speak to the individual, first and foremost, who has let you down… failing that you should talk to the management and leadership. That would be done fairly quietly.”

Where trustees might look to go public with an issue, Chatterton said, would be where they see a potentially troubling trend and are looking to curtail it or raise awareness.

He gave the example of consultants encouraging schemes to adopt their company’s fiduciary management service and trustees are concerned about levels of oversight and transparency.

“That’s the type of thing I can see a trustee looking to go public on,” he said.