Adviser conflicts

The Pensions Regulator is concerned about adviser conflicts, and requires that they are identified and appropriately managed. To give an example of an adviser conflict, the trustees and employer of a scheme may use the same firm to provide actuarial advice.

This might be appropriate in normal circumstances, but if the employer wanted to pass its actuarial advisers information that for some reason must not be passed to the trustees, the actuarial firm would have a conflict. This could be managed in a number of ways.  

The firm could, for example, provide two teams of advisers, each of whom had no access to the other’s files. Or one of the appointments could be moved to another firm of actuarial advisers. The Institute and Faculty of Actuaries requires all Scheme Actuaries to have in place an appropriate conflict management plan with their clients. You should ask to see this if you have any concerns in this particular area.

The Regulator’s view is that trustees should check all of their advisers’ conflicts policies and ensure they are satisfied with them. They should also check they understand and document the nature of any advice that the trustees’ advisers are giving to the employer and ensure that they are happy with the situation.