The Pensions Regulator is considering requiring formal qualifications for independent trustees and trustee chairs, in order to raise governance standards, its executive director told delegates at Wednesday’s conference.
The watchdog may discuss proposals for more stringent expertise requirements for independent and chair trustees through a consultation later this year, Andrew Warwick-Thompson, the regulator’s executive director for defined contribution, told the Financial Times Live summit.
What you don’t want to do is end up in a situation where you make it so difficult to be a trustee that nobody is willing to do it
Andrew Warwick-Thompson, Pensions Regulator
Warwick-Thompson made a distinction between two groups of trustees, the first being the chair of the trustee board and independent trustees, and the second being lay and member-nominated trustees.
“So I can see a potential for making the bar for a chair and particularly an independent trustee to be slightly higher than you might for a lay trustee or a member-nominated trustee,” he said. A straw poll of delegates broadly endorsed this two-level approach.
But he also cautioned: “What you don’t want to do is end up in a situation where you make it so difficult to be a trustee that nobody is willing to do it.”
He added the Financial Conduct Authority could have the same problem with tougher requirements on those who sit on independent governance committees.
The Association of British Insurers’ director-general Otto Thoresen would not be pressed on whether those sitting on IGCs would have to achieve any formal qualifications.
“Whether it’s through a qualification or whether it’s a question of expertise and experience, I think you’ve got to be able to demonstrate why you’re credible in taking that role on,” Thoresen said.
Speaking on an earlier governance panel, Barry Parr, co-chair of industry body the Association of Member-Nominated Trustees, said it was a shame trustees are not legally required to complete the regulator’s trustee toolkit.
“It can be too easy to just have a single track on governance. I think there’s a lot of merit in having breadth of talent in a trust or board and that is what I see in the ones I sit in,” said Parr. However he added he was not sure it needs to go as far as a further qualification.
