Ben Fairhead of Pinsent Masons said: “The change to the guidance reflects a growing unease in the industry around how, in particular, the ‘incentives’ red flag operates under the regulations. The government may not have meant to catch small-scale cash payments made by legitimate operators in the market, but the reality is that the definition does capture them – as well as potentially many other non-scam incentives besides.”
TPR also updated its guidance on a separate amber flag which is triggered when overseas investments are included in a scheme. The regulator said the target of that flag “is not whether the investment is in…a global equity fund”, but whether it is in “assets or funds where there is a lax, or non-existent, regulatory environment.” The new guidance tells trustees and managers that, where their scheme rules allow, they can consider granting a discretionary transfer despite the inclusion of overseas investments when the risk of a scam is low.
Fairhead said: “The regulator’s shift in focus to proposing a discretionary transfer as a means of working around this problem might work in some circumstances, but trustees really will need to consider the position carefully and make sure adequate protections are in place – and take advice if necessary. This might be no more than a sticking plaster as the regulations will inevitably need some amendment in due course.”
“Despite the strong policy statements around intention, there remains…
