The Pensions Regulator has said it is prosecuting businessman Dominic Chappell, whose company Retail Acquisitions owned high street chain BHS when it became insolvent, leaving behind an underfunded pension scheme.
When previous BHS owner Sir Philip Green agreed to pay £363m towards a new scheme, the general public likely considered the case of one of the UK's best known retailers closed.
Presumably they are trying to put together a case to use anti-avoidance powers
Chantal Thompson, Baker McKenzie
But the regulator has now said it is taking Dominic Chappell, who had bought BHS for £1, to court for failing to provide information and documents without a reasonable excuse. It requested these during its investigation into the sale of BHS.
Since April last year, three notices have been issued under section 72 of the Pensions Act 2004, which gives the regulator the power to request relevant information. Having failed to provide it, Dominic Chappell is due to appear at Brighton Magistrates’ Court on September 20 2017.
This is the fourth ever prosecution by the regulator under s72, the other three having separately involved a charity boss, a solicitor, and an office manager at a pension company.
A spokesperson for the regulator stressed that “all three previous [prosecutions] have been successful”.
However, despite the court victories, the regulator has so far not succeeded in obtaining the information in one of these cases.
Prosecution is a 'painless way' to demonstrate strength
Chantal Thompson, partner at law firm Baker McKenzie, questioned whether a successful prosecution would necessarily yield the information the regulator is after.
She also pointed out that prosecuting Dominic Chappell under s72 is a message to the general public. She said it was “a relatively painless way of the regulator demonstrating to the public at large that it is prepared to take action against people who are not properly supporting a pension fund”.
The regulator came in for criticism during the Work and Pensions Committee's inquiry into BHS, where Richard Fuller MP called TPR chief executive Lesley Titcomb “not much of a regulator”.
Following the BHS scandal, the regulator is having to restore faith in its strength, and could be under general political pressure, said Thompson, adding: “Mr Chappell is probably a relatively easy target. But it is interesting that it has selected the high profile target.”
There are however many people who would like to hear about Sir Philip instead. “He’s the one that we’re all going to be interested in,” she said.
Thompson pointed out though that “Green more readily engaged with the regulator than Chappell has, and he’s agreed to pay up… Green has more to lose than Chappell.”
TPR could spread its net further
The regulator could need the requested information to build a case, Thompson speculated: “Presumably they are trying to put together a case to use anti-avoidance powers.”
Regulator’s BHS report focuses on areas of improvement
In June, the Pensions Regulator highlighted the lessons it learnt from the BHS case in a regulatory intervention report, as experts stressed the need for more proactive engagement.
As part of its anti-avoidance investigation into BHS, the regulator said last November that it had sent warning notices to Dominic Chappell and Retail Acquisitions, as well as to Sir Philip and Taveta.
An anti-avoidance case might seem counter-intuitive given that Retail Acquisitions is in liquidation, but the regulator might want to look further than that.
Hugh Nolan, president of the Society of Pension Professionals and director at consultancy Spence & Partners, pointed out that parties other than RAL could potentially come under the spotlight.
But even aside from the possibility of trying to build a bigger case, he said the regulator is doing the right thing going after those who fail to provide information.
While bringing the prosecution against Dominic Chappell might not necessarily yield the desired result for the regulator, “whether they get anything or not, I think it’s right that they look”, said Nolan.
