UK pension scheme trustees must submit their first compliance statement, along with a certificate, directly to the Competition and Markets Authority (CMA) by 7 January 2021.
The compliance statement relates to obligations under the CMA Order issued in June 2019, including setting strategic objectives for investment consultants, which followed the conclusion of the CMA’s investigation into the investment consultancy market. This is a new requirement, which needs to be submitted to a new regulator by a new deadline.
So far, so simple.
However, there are three ways in which things could go wrong for trustees. Here are our tips for how to stay on track:
- Use the right format – the term “compliance statement” is defined in the CMA Order, which sets out exactly the format the statement should take. The CMA Order also confirms the form of certification that must accompany the statement and who should sign it.
- Send it to the right place – it had been expected that the government’s response to its consultation on the implementation of the CMA Order for pension schemes, and associated regulations, would confirm compliance statements should be submitted to The Pensions Regulator. That response and the final form of the regulations have been delayed as a result of the effects of COVID-19. Trustees should therefore send the statement to the CMA.
- Meet the correct deadline – no extension has been announced to the deadline of 7 January 2021 despite the delayed government consultation response. That is therefore the date by which trustees must submit their compliance statement to meet the requirements of the CMA Order.
Failure to meet the requirements of the CMA Order could incur penalties (in extreme circumstances) of up to £30,000 so, if in doubt, trustees should take advice.
Trustees should also be mindful of another deadline in relation to the separate need to hold a competitive tender exercise for certain fiduciary management providers. If 20% or more of their scheme’s assets were under fiduciary management on 10 June 2019 and any of those arrangements were not the subject of a competitive tender exercise, trustees will need to hold a competitive exercise in respect of the assets covered by the non-compliant arrangements. This will need to be held before the later of 10 June 2021 and five years from the commencement of the first agreement which appointed the fiduciary manager.