There is a need for a compulsory professional trustee to be appointed in each small self administered scheme, according to Martin Tilley director at WBR Group.
Speaking at the Association of Member-Director Pension Schemes' annual conference this week (May 14), Tilley discussed how the Ssas market was at a crossroads and that practitioners didn’t necessarily have influence over which path will be taken.
Tilley said this was in part due to the Pension Ombudsman’s ruling on Rowanmoor Trustees Limited.
“When you look back at the long history of Ssas's, there is no question that the role of the trustees is an important one but they have very different roles, member trustee, professional trustee and being a practitioner.
“With the TPO decision regarding Rowanmoor Trustees, it is possible that claims management firms may target Ssas's and with additional responsibilities being put onto professional trustees, there is a danger that some will change to practitioner only.”
Back in February, the Pensions Ombudsman upheld a complaint against Rowanmoor Trustees Limited regarding the level of due diligence carried out on a small self-administered scheme.
It found an investment within the scheme was not appropriate and that a lack of due diligence by the trustee company cause a loss to to member.
When surveyed, 10 per cent of the audience at the conference said their firms were already considering changing from professional trustee to practitioner only.
WBR Group warned this could be the “tip of the iceberg” with the knock-on effect of this being “disastrous” for the sector with more responsibility being put on the remaining professional trustees and the potential for costs increasing due to demand.
Some 94 per cent said they were already actively reviewing their business model, 12 per cent of which had already changed.
Tilley said: “There is the real possibility of a polarisation in the Ssas market, with professional trustees enhancing their offerings which clearly has financial implications to their clients. Alongside some opting to withdraw from the market completely, leading to consolidation, or a shift towards a model focused solely on being practitioners.
“In the latter scenario, distinguishing between service offerings and their respective costs might pose a challenge for clients. For me, the argument for a compulsory professional trustee being involved in each Ssas is compelling and 69 per cent of attendees agreed.”
alina.khan@ft.com
