A happy ending?
Editorial: The sad story of British Home Stores and its pension scheme members has for now come to an end with Philip Green’s payment of £363m.
However, it is unlikely to change the case’s public perception as a general failure, not least of regulation – even if in the end it was the Pensions Regulator that made Green pay up.
Could it have been handled better, if the clock were to be turned back? Probably. Will such cases never happen again if the regulator is given more powers? Unlikely, says Ruth Bamforth, senior associate at law firm Walker Morris, in her comment piece. Regulator clearance for mergers and acquisitions, she argues, would be mandatory only for a minority of deals, and would be the exception rather than the rule, although precisely what will happen remains to be seen.
In the meantime, the Work and Pensions Committee and the regulator continue exchanging virtual ‘niceties’.
The committee has issued a press releases asking for the regulator “to match actions to words” and stop being so “clunky”. The regulator, it said, must never again take two years to intervene in a negotiation, “only to conclude with a 23 year - far too long - deficit recovery plan”.
The regulator responded by grovelling while also highlighting improvements that have already been made – such as increased front-line resources, engaging with schemes earlier, pursuing more cases and “being bolder in the use of our powers”.
“But we acknowledge there’s still more to do. We’re reviewing our regulatory approach, as recognised by the committee. People can expect to see us move to enforcement more quickly in future, and there will be other changes as well,” according to the statement.
The difficulty for the Pensions Regulator might lie in the fact that in theory, most corporate activity and management decisions can be found have put pensions at risk if they contribute, directly or indirectly, to a company’s insolvency.
The regulator would therefore need to review countless corporate decisions to make sure members are safe, one might argue. But what is clear is that once a red flag is raised regarding a scheme sponsor, intervention should follow, and we can expect to see more of that.
Sandra Wolf is editor at Pensions Expert. You can follow her on Twitter @SandraCWK and the team @pensions_expert.