The regulator sends a warning shot with its first criminal convictions

Total fines of £23,000 from two court cases may not be the most substantial penalties ever imposed by the UK justice system. But as the outcome from the first criminal convictions brought about by the Pensions Regulator (TPR), they are significant.

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Solicitor Anthony Wilson and his company, Ashley Wilson Solicitors LLP, were collectively fined £16,500 in early April at Brighton Magistrates’ Court for failing to hand over documents related to a pension scam investigation. This was the first time that TPR had secured a criminal conviction.

Patrick McLarry, chief executive of Hampshire-based Yateley Industries for the Disabled Limited, was prosecuted in the same court for refusing to give the watchdog information related to unusual pensions investments, and fined £6,500.

Nicola Parish decried the “series of woeful excuses” her team had received

TPR’s executive director of frontline regulation,  from Wilson and his company. TPR had requested documents about a property transaction carried out by an individual linked to a scam investigation (Ashley Wilson and Wilson himself were not directly involved with the scam investigation). After nine months’ delay, including claims of difficulties in locating the documents and unfulfilled promises by Wilson to hand them over, TPR took out a search warrant to retrieve the paperwork from the Knightsbridge-based solicitors.

The judge ordered Wilson to pay a £4,000 fine, £7,500 costs and a £120 victim surcharge; and Ashley Wilson Solicitors LLP to pay a £2,700 fine, £2,500 costs and a £120 victim surcharge. He criticised the firm’s poor corporate governance and lack of checks-and-balances between partners.

McLarry’s case related to an information notice issued by the regulator in July 2015. It requested further information about French bank statements in the names of McLarry and his wife. McLarry had initially said that as the documents contained third-party information, supplying them would be in breach of French privacy laws. Then he argued that they were protected by legal privilege, and subsequently refused TPR’s requests on the grounds that the documents might incriminate him. TPR employed a French law expert to give evidence on its behalf.

McLarry was ordered to pay a £2,500 fine, £4,000 costs, and a £120 victim surcharge. “Patrick McLarry refused to co-operate with TPR staff and gave a number of excuses which were rejected by the court,” said Parish. “This was a clear case of him deliberately refusing to comply with the law.” The judge said that the fine reflected “high culpability” on McLarry’s part, hindering TPR’s investigations.

Both cases hinged on refusal to provide documents as requested under section 72 of the Pensions Act 2004 without a reasonable excuse, which is a criminal offence under section 77 of the Act. Although the regulator has previously made some use of its power under section 72 to demand information, it has not in the past taken failures further by applying section 77.

This is part of a broader trend, by which the regulator wants to ensure that its powers are exercised

“This is part of a broader trend, by which the regulator wants to ensure that its powers are exercised.” says Rosalind Connor, partner at ARC Pensions Law. “Most of us are aware that the response which is most likely to provoke further and more aggressive reactions from the regulator is to give no response. These cases strongly illustrate this.”

Connor adds: “This is not to say that receipt of a section 72 notice means that everything has to be handed over – there are some exceptions – but it really must not be ignored.” Immediate dialogue with advisers is a vital first step, says Connor. “And, if information can’t be provided, or not on time, it is really very important to start a dialogue with TPR to explain and agree a way forward.”