Regulator admits ETV guidance went too far

In response to concerns raised about the ability of trustees to comply with last month’s ETV guidance , senior industry sources say the regulator has acknowledged the difficulties, but is bound by its previous pronouncements. 

These sources told schemeXpert.com  the regulator has said it will show restraint on the more demanding issues of the guidance, particularly the requirement to monitor advisers appointed to the transfer. 

Although a regulator spokesperson denied it had changed its approach, saying it expected trusteesto “play an active role in ensuring members are able to make informed decisions”. 

The final wording of the guidance advises trustees to “start from the presumption” ETVs are “not in most members’ interests”.

They should have a “clear understanding of their duties and legal obligations”, it says, ensuring legislative compliance and maintaining their fiduciary duty – and, if necessary, should “seek their own legal advice”. 

Another section calls on them to “reassure themselves that the broader commercial interest, remuneration basis and process for selection of advisers does not militate against the likelihood of members seeking or receiving impartial advice”.

Ruth Bamforth, an assocate at Eversheds, said the guidance had created an active legal responsibility for trustees. 

“By putting all this emphasis on what trustees are supposed to do, it is trying to create a legal duty where trustees didn’t really have it before,” she said.

“This is the regulator saying to trustees, ‘we want you to act more like policemen’. They are creating that responsibility.” 

Richard Butcher (pictured), managing director at Pitmans Trustees, said the standard had been set “very high”, but denied it was asking too much of trustees. 

“It sets the standard high, but that is just to stop unscrupulous advisers and employers from doing the wrong thing,” he said.