Pensions regulator director on why scammers should fear his agency

Towards the end of his distinguished two-decade career at audit giant KPMG, David Fairs was at the top but felt restless. Although he was a partner and had achieved a lot with the firm, he had ambitions to do something different.

Those ambitions centred on wanting to shape the direction of pensions legislation and improve the governance of pension schemes. In July last year, Fairs rose to that challenge when he became executive director for regulatory policy, analysis and advice at The Pensions Regulator.

At Money Marketing’s offices off Oxford Street, Fairs takes a glance out of the window when asked what the relevance of TPR, and his role, is to the average financial adviser.

He responds: “We as an organisation focus on getting good member outcomes and we will work with other regulators where we see inappropriate advice. For instance, we work very closely with the FCA where we see scams and bad behaviour.”

Working with other regulators to get results is the core component of what Fairs believes makes an effective watchdog.

This is because talking about the need for good governance in pension schemes is far easier than making it a reality. That observation can also be applied to the whole supervisory architecture.

He says: “I have been involved with policy in the past when I was chairman of the Association of Consulting Actuaries for a couple of years. It was an interesting period, when Steve Webb was pensions minister. He had the defined ambition agenda and I chaired one of the industry working groups. So I had this experience and was frustrated change was not happening, but there was some naivety on my part. Working at TPR has made me realise making policy is much more complex than I realised. It is very exciting for me to understand how it actually works.”

The learning has come at considerable speed as Fairs has had to grapple with issues from Brexit to the pensions dashboard and defined benefit super-funds. Fortunately for Fairs, the culture at the watchdog and the resources at his disposal have helped him get on top of his brief.

He says: “I thought it would take a long time to feel comfortable at TPR but it did not, despite the fact it has grown to 700 people. It is very welcoming and open. People chat to me in the lift; there is a family feel and it has been a much easier transition than I thought it would be.”

Fairs has 120 people working under him, divided into two teams. The first is a 30-strong policy team of specialists that works with the FCA, Department for Work and Pensions and other entities to look at issues such as the current consultations on DB super-funds and collective defined contribution schemes.

The second team consists of 90 staff, including actuaries, business analysts, lawyers and investment consultants, dealing with actuarial, legal and investment issues.

Over the past year, Fairs estimates they have spent half of their time supporting the policy team’s work on DB super-funds and CDCs. The other half of their time has been spent helping provide relevant guidance and expertise to case managers in TPR’s frontline case team.

Fairs is certainly determined to make a difference and argues his decision to move from KPMG to TPR is not a step down, career-wise.

He says: “There was a snobbish reaction to what I was doing from some in the sense of ‘why do you want to go there?’ The one thing that actually irritated me was they said ‘it is nice you are giving something back to the industry’. I find this very condescending. Maybe they saw being a partner at KPMG was a pinnacle and this was stepping down. TPR has some of the greatest intellectual challenges you can think of.

“I have just come from discussing DB super-funds with other regulators and the challenge of how to regulate them. Working out how these DB super-funds would work is a huge intellectual task.”

Perhaps the hardest part of the job is the need to be tough but also fair as a regulator. He says: “There is a balance here. Being a regulator is not a popularity contest; it is about making tough decisions and protecting members’ interests, and ensuring good member outcomes.

“That does not always make you liked and I would be concerned if we came top in a popularity contest.

“If you are trying to do the right things then actually you should respect the regulator. If you are a scammer or you are doing something that is not appropriate then you should fear the regulator and should expect us to take action against you.”