Criminal Liability in Regulatory Contexts Responses - Law ...

Legislative and Parliamentary Sub-Committee of the Association of
Pension Lawyers (APL)
1.1076 There is scope for defence to be used by courts in relation to provisions relating
to employer-related investment restrictions (s40(5) Pensions Act 1995). The harm
the restriction is supposed to address is relatively clear – to ensure the pension
arrangement’s assets are not, subject to the threshold, invested in the sponsoring
employers of that arrangement in practice – it gives rise to issues and is difficult
to police. See response for more detail.
1.1077 Pensions Regulator recently released statement in relation to employer-related
investments in which it recognises some difficulties trustees face managing
investments (eg where made through collective investment scheme). Also sets
out what Regulator may take account in determining whether to use its power in
respect of a potential breach of employer-related investment restrictions. Clear
from the statement that the Regulator acknowledges that it can be difficult for
trustees to keep track of scheme investments in particular as they become
increasingly complicated. Therefore extent to which trustee was at fault in relation
to breach and whether it took steps may need to be considered.
1.1078 Statement goes some way to providing comfort to trustees in respect of how
Regulator may exercise powers but it does not go far enough. Provisions relating
to employer-related investments which currently would give rise to strict liability
and imposition of criminal sanctions on a trustee would benefit from proposed
due diligence defence. Preference for the wider defence for trustee to discharge
burden of showing that due diligence was exercised in all circumstances but the
alternative of trustee showing that he took all reasonable precautions and
exercised all due diligence would also be beneficial.
1.1079 Defence should also be used in relation to offence of disclosing “restricted
information” received from Pensions Regulator and Board of Pension Protection
Fund (s87 and 197 Pensions Act 2004) and acting as an auditor or actuary of a
pension scheme when ineligible to do so (s28 Pensions act 1995).
1.1080 Generally support proposed new guidelines and defence. Pension scheme
trustees often have little incentive not to be overly cautious and imposing criminal
sanctions on a strict liability basis only increases the likelihood that they will act in
this way. Therefore believe that introducing a defence to offences set out above
especially those relating to a breach of employer-related investment restrictions,
would assist efficient management of pension scheme investments.
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