With a policeman father and a mother who is ordained as a priest, it seems Lesley Titcomb was destined from birth to work at a regulator.
She has spent almost her entire career at the FSA and FCA, including managing the transition, and is now chief executive of The Pensions Regulator.
Titcomb joined TPR – which regulates trust-based pension schemes – in March this year after an 18-month search to find Bill Galvin’s replacement. She takes over at a difficult time.
Defined benefit schemes are under growing pressure, pension scams are on the rise and occupational schemes have emerged as the providers least prepared for the pension freedoms.
Meanwhile, in the background auto-enrolment is picking up speed, with nearly two million employers attempting to navigate the rules within the next three years.
Calls to merge the far smaller regulator with behemoth FCA have also not gone away.
But Titcomb says there are “good reasons” why there are two regulators and is adamant TPR does not need to fundamentally change its approach.
She says: “The world is changing rapidly around us but revolution is not needed in the way we regulate.”
She admits, however, the organisation will need to adapt to tackle the scams that have flourished on the back of the freedoms.
Police data shows losses resulting from pension scams more than tripled in May – to £4.7m – just a month after the reforms took effect.
She says: “DC is a slightly different style of regulation for us. In DB we have a wide range of powers you can use once you become aware of a situation after the event and over quite a significant period of time.
“Whereas in DC, members of a scheme are exposed to investment risk and it’s easier to get your money out. They are more exposed and there’s the potential for scams. It used to be liberation and trying to avoid tax penalties and now we’re seeing it evolve in the freedom and choice world.
“That kind of problem requires a much more front foot, fast response type of regulation. Once the assets have gone, offshore or invested in something deeply unsuitable, it’s too late.”
One of TPR’s summer projects is investigating how occupational schemes, in particular mastertrusts such as Nest, are adapting to the reforms. The majority of schemes are still only offering a 25 per cent lump sum and annuity option, Titcomb says.
“We want to understand how they’re responding to freedom and choice. There are a whole range of risks to mastertrusts: there’s the governance, the volumes they’re coping with and dealing with investments.
“One focus will be business continuity. Could they keep operating if something happened? Will members still be able to transact?” she says.
Auto-enrolment will bring millions of small employers into pensions for the first time and it is TPR’s job to support, monitor and dish out penalties when necessary. That job has become harder as a growing economy means an extra half a million firms than expected will hit staging dates.
She says: “We’ve failed if we’ve got to the stage of fining. Our success will be measured in getting small firms to engage early and do things that they need to do to auto-enrol.
“The discussion around carers and nannies has helped raised awareness. We’re speaking to organisations like the Association of Convenience Stores to engage with small firms.
“There are good examples other organisations have run, such as HMRC and real time information or the FCA and consumer credit, and there are techniques you learn in getting your message across to people,” she says.
Titcomb is also considering beefing up TPR’s powers. Unlike the FCA it cannot make rules and the new “second line of defence” imposed on pension providers at the eleventh hour may be enshrined in law.
“There’s a perception, particularly among consumer organisations, that rules are better than guidance and have more power, and that therefore we can enforce more easily if someone breaches a rule or law.”
The rapid and far-reaching nature of the pension reforms has left many in the industry clamouring for tighter guidelines – a plea familiar to Titcomb from her days in Canary Wharf.
“Some say they want more guidance but what people are normally looking for is certainty.
“That runs across the gamut of small organisation regulation. When I was a small firm supervisor at the FCA that was true. On the other hand, some people say ‘please don’t give us anything new and ask us to comment, we’d just like a period of quiet and consolidation to sort ourselves out’.”
Despite the difficulties of balancing enforcement and support, Titcomb remains wedded to the “intellectual challenge” of regulating.
“You don’t go into regulation to be liked, that’s for sure,” she says.
“Over 20 years I’ve experienced some quite vitriolic feedback at times. The strongest I experienced was the take on of mortgage regulation by the FSA and the commencement of the Mortgage Market Review.
“But it’s important that regulators are held to account. The industries that we regulate contribute to the levy that funds us and it’s incumbent on us to be transparent and accountable.”
“It’s important that people engage with us and that’s why consultation is so important. We need to know how these things will play on the ground really.
“I’m a great pragmatist – whatever we do has got to be workable in practice. There’s no point in us designing regulation or guidance that doesn’t work on the ground.”
What’s the best bit of advice you’ve received in your career?
Trust your instincts: 95 per cent of the time you will be right and the other 5 per cent is a learning opportunity.
What keeps you awake at night?
Very little! I remain resilient by trying to get seven hours sleep a night.
What has had the most significant impact on financial advice in the last year?
The requirement to take advice on certain transfers and for trustees to signpost members to Pension Wise and regulated financial advice.
If I were in charge of the FCA for a day I would…
I cannot speculate about hypothetical situations.
Any advice for new advisers?
Consider getting the qualifications for advising on pensions. High quality pensions advice is in demand.