The Pensions Regulator has launched enforcement action against former BHS owners Sir Philip Green and Dominic Chappell in an effort to shore up financial support for the company's troubled pension scheme.
In a release on Wednesday evening, the regulator revealed it had sent warning notices to Sir Philip, Taveta Investments Ltd, Taveta Investments (No. 2) Ltd, Dominic Chappell and Retail Acquisitions Ltd.
If you go behind the headlines, this is all about a pension scheme with an employer that was in financial difficulties and a pension scheme with a deficit. A large deficit, but not an unheard-of one
Peter Murphy, Sackers
In the notices, the regulator laid out the case for use of two of its powers: a financial support direction, which requires financial support to be put in place by the target; and a contribution notice, which requires a cash payment to be made to the scheme.
A 'credible' offer
In a statement Lesley Titcomb, chief executive of the regulator, said: “Issuing warning notices at this time reflects the outcome of our investigations and that we are yet to receive a sufficiently credible and comprehensive offer in respect of the BHS schemes.”
The recipients of the warning notices will now have an opportunity to make representations, but a spokesperson for the regulator said they were not expected imminently.
“We’re not talking weeks, it could be a long time,” the spokesperson said, adding that a hearing is expected next year.
After the representation period has passed and the regulator’s case teams have considered what has been put forward, the case will pass to the regulator’s determinations panel – a committee that operates at arm’s length from the regulator and rules on the use of some of its powers.
The notices sent to Green and the two Taveta Investment companies are different from those sent to Chappell and Retail Acquisitions Ltd, but the regulator did not comment on how they differ.
Scathing response from Fields
Frank Field, chair of the Work and Pensions Committee, again condemned Green.
He said: “We are not surprised that the Pensions Regulator has, like all the rest of us, lost patience with Sir Philip Green’s excuses and empty promises. His answer throughout our inquiry was always that he was going to ‘sort’ the disastrous position he left the pension fund in when he sold off BHS to Dominic Chappell for £1.”
Field added: “We are glad to see TPR is now calling his bluff and instigating enforcement proceedings.”
Sir Philip Green said he has made a credible offer to the regulator that would prevent the scheme falling into the Pension Protection Fund.
"I have read the statement from the Pensions Regulator this evening and noted its contents. I have provided the regulator with what I believe to be a credible and substantial proposal, with evidence and bank confirmation of cash availability, which would prevent the scheme from entering the Pension Protection Fund. This is in order to achieve a better outcome for the BHS pensioners."
He added: "I have also spoken to the chairman of the trustees who is supportive of the proposal on the basis that it provides members with better benefits than they would receive from the PPF. I believe the above statement confirms the statement of intent that I made in regard to the BHS pensioners."
Enforcement action 'always' on the cards
Peter Murphy, partner at law firm Sackers, said the regulator will always consider enforcement action where schemes might fall into the PPF.
Select committees: Philip Green has 'moral duty' to help fix BHS pension deficit
A joint report published by the Work and Pensions Committee and the Business, Innovation and Skills Committee found negligence caused BHS’s pensions deficit, and opened the possibility of increasing the Pensions Regulator’s powers.
“It appears the regulator is looking at using both powers to get a sum of money and more financial support for the scheme. Where you have a pension scheme that has gone or is going into the PPF, [enforcement action] is always something the regulator will give some consideration to.”
He added: "If you go behind the headlines, this is all about a pension scheme with an employer that was in financial difficulties and a pension scheme with a deficit. A large deficit, but not an unheard-of one."
