Pension Arrangements in the Bailiwick - Thematic Review 2017

Summary

This is a thematic review report published by the Guernsey Financial Services Commission (GFSC) following a 2017 survey and onsite visits examining how firms in the Bailiwick provide pension and gratuity scheme services. It documents findings across seven areas of practice and is intended to inform Licensees ahead of, and alongside, the new Pension Licensees (Conduct of Business) & Domestic and International Pension Scheme and Gratuity Scheme Rules (No.2) 2017 (the Pension Rules).

• Introducers: Licensees must assess and periodically review the suitability and competence of introducers and other Service Providers (rule 5.1.2), and ensure any commission based introducer fees remain reasonable (rule 10.12).
• Investment governance: Licensees must maintain and monitor a written statement of investment principles covering asset types, balance, risk, expected returns and liquidity (rule 10.15), and understand the member directed, Licensee directed and third party directed investment approaches (rule 10.16).
• Fees and charges: Licensees must ensure member borne charges are reasonable and provide members with a statement of actual or anticipated fees and charges upon joining a scheme (rule 10.12).
• Bookkeeping and reconciliations: The Commission highlights that some firms are not bookkeeping all transactions in a timely manner and reminds Trust Service Providers to keep and preserve appropriate records under the Codes of Practice for Trust Service Providers.
• Complaints handling: Licensees must have a written complaints procedure (rule 7.1.1) and must notify the Commission of any complaint unresolved for more than 3 months or considered significant (rule 7.2.1); complaint reviews must be conducted by a suitably competent, independent officer.

The report itself is informational and presents survey statistics, case studies and areas for improvement rather than creating new rules, but it repeatedly points Licensees back to specific binding obligations already contained in the Pension Rules.

Key obligations

• Licensees must assess Service Providers, including introducers, on appointment and periodically review their suitability and competence (Pension Rules rule 5.1.2).
• Licensees must ensure member borne charges, including commission based introducer fees, are reasonable in the circumstances (Pension Rules rule 10.12).
• Licensees must provide members with a statement of actual or anticipated fees and charges upon joining a Pension Scheme or Gratuity Scheme (Pension Rules rule 10.12).
• Licensees must maintain and monitor a written statement of principles governing investment decisions, covering types of investment, balance, risk, expected returns and liquidity (Pension Rules rule 10.15).
• Licensees must be familiar with and apply the member directed, Licensee directed and third party directed investment approaches (Pension Rules rule 10.16).
• Licensees must maintain a written procedure for effective, fair and proper handling of complaints relating to pension and gratuity scheme business (Pension Rules rule 7.1.1).
• Licensees must notify the Commission of any complaint unresolved for more than 3 months from becoming aware of it, or any complaint considered significant (Pension Rules rule 7.2.1).
• Complaint reviews must be undertaken by a suitably competent officer who is independent of the circumstances giving rise to the complaint.
• Trust Service Providers should keep and preserve appropriate records of trust business, including accounts, tax records and minutes of meetings, per the Codes of Practice for Trust Service Providers.

Applies to

Full Fiduciary Licensees, pension scheme and gratuity scheme business providers, trustees and administrators of pension and gratuity schemes, Trust Service Providers, introducers (where engaged by Licensees)

Deadlines

• 3 months from the date the Licensee becomes aware of a complaint: Licensees must notify the Commission of any complaint that remains unresolved after this period, or any complaint considered significant, under Pension Rules rule 7.2.1.