Industry

Norton scandal could change pensions regulations

The Norton pensions scandal could have wide-reaching effects on who can set up pension schemes - although it might not stop it from happening again...

ONE of the biggest news stories of 2020 was the demise of Norton Motorcycles, the takeover by TVS Motor, and also the resulting pension scandal that engulfed Ex Norton CEO Stuart Garner.

Now, The Pensions Regulator (TPR) is looking into whether the rules around who can set up and administer such schemes need an overhaul.

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Stuart Garner set up a number of pension schemes that helped to fund the motorcycle business directly. The trouble was, when funds became available to withdraw, Garner wasn’t forthcoming in allowing the cash to be released. Instead, he held on to the cash, advising that in order to withdraw the funds, somebody else would have to fill the void left in the scheme.

The investigation that following the scandal found chronic miss-management and maladministration was at the heart of the issue, with Garner being described as acting “dishonestly” and that he “didn’t have the right knowledge and understanding” of the law relating to pensions and trusts.

In light of this, TPR chief executive, Charles Counsell, has written to the Work and Pensions Committee (WPC) chair, Stephen Timms, responding to questions raised by Timms concerning the TPR’s handling of the case.

Pensions Age reports that Timms had described the Norton pensions case as ‘shocking’, going on to say it raised ‘serious questions’ regarding the regulator’s involvement in pension schemes and the kind of protections offered to those paying into them.

Moving forward, TPR is to conduct a review to investigate if things can be put into place to prevent the same thing happening to people further down the line.

Pensions Age reports that Counsell said, “We will consider how we process and develop information around whistleblowing reports, alongside other intelligence sources to identify trends and risks which pose a threat to savers,”

Despite the mound of evidence the team has to work with, Counsell added that it is unlikely the Norton story will have wide-reaching after affects. “To make the best use of public money we have to target our resources where we see the greatest risk,”, basically stating that small pension schemes such as the Norton ones pose a smaller risk than much larger, densely populated schemes.

In response, Timms concluded that small schemes such as the Norton ones pose a risk to consumers as they seem to be able to sail under the radar of the pension regulators.

He said, “TPR’s own research has shown the governance standards of small pension schemes to be consistently lower than their larger counterparts.

“Setting up small schemes has provided opportunities to scammers in the past and we will be looking at this in more detail in our upcoming inquiry.”

Comments

“TPR’s own research has shown the governance standards of small pension schemes to be consistently lower than their larger counterparts." Yes!
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