The Pensions Regulator is being more proactive in its approach to regulation. As such, it is increasingly common for pension scheme trustees, corporate sponsors, advisers and service providers to receive requests for information from the Regulator, both formal and informal. Requests can be wide ranging and require information to be provided within a very short timescale. This guide sets out the key actions that you should take if you receive an information request.
Responding to formal requests – “Section 72 notices” Under section 72 of the Pensions Act 2004, the Regulator can require an individual or organisation to: • produce any document or provide any other information that is relevant to the exercise of the Regulator’s functions, and • provide an explanation of any such document or information in writing or in person. A Section 72 notice may be served on trustees, corporate sponsors, advisers, administrators or any other person who holds or appears to hold relevant information.
What should you do if you receive a Section 72 notice? 8 7 6 5 4 3 2 1 Check the scope What is the extent of the information and documentation that is being requested? Is the scope practical? How much time and expense would be involved in providing this? Who is the recipient? The target individual, scheme or organisation should be identified in the notice. The Regulator may not have identified the appropriate entity, so you should consider whether the named target has the relevant information or whether this is held by another party. Is the deadline reasonable? If the deadline for providing information is unreasonable or unrealistic you should engage with the Regulator at an early stage. It may be possible to secure an extension and / or provide information in tranches. Engage with the Regulator Any queries, requests for extensions and discussions about defining the scope of searches should be raised with the Regulator as soon as possible. You should also agree how the information will be provided. Review information Documents and other information should be audited to check whether any should be withheld or redacted (eg on privilege or data protection grounds). The extent of any such review will need to be balanced against the time and costs. Take legal advice You should take legal advice at an early stage on the terms of the notice, the scope for securing an extension (where necessary), any communications with the Regulator and whether any documents or information should be withheld. Conduct search A proper search will need to be carried out to find all relevant documents and information. Assess at an early stage whether you have the technological capability to conduct a digital search and disclosure exercise. Give careful consideration to search terms and processes and document what you do and why. Submit information Once prepared, all documents, information and explanations that have to be provided should be submitted to the Regulator with an explanation of the extent of the disclosure and the searches conducted.
Scope for challenging request There may be scope to challenge a Section 72 request for information, either directly with the Regulator or by way of judicial review, where: • the information requested is outside the Regulator’s powers (eg it is not relevant to the exercise of the Regulator’s functions) • the request itself is unreasonable, and / or • the deadline for providing the information is unreasonable or unfair. Any such challenge should be made promptly, with legal advice sought on relevant time limits. Cost of compliance The cost of complying with a Section 72 notice can run to several thousands of pounds. As a matter of good governance, trustees should: • check whether this cost would be covered by their scheme’s insurance policy, and • check whether they may be on the hook for costs incurred if their scheme administrator, advisers or other service providers are required to comply with a Section 72 request. Sponsors should also check whether they may be responsible for covering the cost of complying with a Section 72 notice under the terms of engagement with their advisers. Deadlines Deadlines imposed by the Regulator must be fair and rational. What that means depends on each particular case but considerations such as the volume of documents and information requested and where and how these are held will be relevant. Do not ignore! Failure to comply with a Section 72 request, without reasonable excuse, is a criminal offence which may result in an unlimited fine. Any person who intentionally and without reasonable excuse alters, supresses, conceals or destroys a document requested under section 72 may also be fined and/or face imprisonment for up to two years. 06 RESPONDING TO REQUESTS FOR INFORMATION FROM HERBERT SMITH FREEHILLS THE PENSIONS REGULATOR PRACTICAL GUIDE Responding to informal requests for information Trustees, sponsors and other organisations may also be asked to provide information to the Regulator on a voluntary basis. Where this happens, they should still review the request in light of the issues outlined above (including the cost of providing the information and whether any documents or information are covered by legal privilege or should be withheld on other grounds). However, parties should engage co-operatively, as it is likely to be easier to manage the scope of an informal request for information and the timescale and costs involved than it would be if the Regulator issues a formal Section 72 notice. Document intensive reviews We have a dedicated team of qualified lawyers and legal assistants in Belfast who can conduct cost effective, large-scale document reviews for contentious and regulatory matters. They have helped clients respond to large scale Section 72 notice requests, reviewing documents for relevance and privilege. Samantha Brown Partner Head of Pensions M+44 20 7466 2249 firstname.lastname@example.org Andrew Lidbetter Partner M+44 20 7466 2066 email@example.com Joh