Laymen caught in crossfire

As from 6 April, companies could no longer appoint actuaries and lawyers for the trustees of their pension funds. The Pensions Act requires the trustees themselves to take on this role in the name of independence.

It also imposes a duty upon actuaries to report significant breaches in the administering of the funds to Opra, the new pensions regulator.

But exactly what constitutes such a breach is unclear. Consequently, in an attempt to limit actuaries' liability, the Institute of Actuaries has issued a guidance letter of appointment that lists the 'significant' events that the trustees will have to reveal to the actuaries.

This move by actuaries to limit their exposure to claims of professional negligence is of serious concern. They are attempting to use letters of appointment to introduce the restrictions. What is more disturbing is that the use of letters of appointment to limit liabilities is being encouraged by the Institute.

There is no basis in law that gives the Institute this sort of power. I know a number of my colleagues, both within and outside my firm, who are concerned that lay trustees are having duties and responsibilities imposed on them that go beyond the law and that are outside their comprehension as laymen.

What is worse is that, as a result of the Institute laying down such criteria, there is, in effect, a cartel in existence. This is because all the actuaries in the UK can hide behind their institute's guidance note.

If the Law Society were to attempt to impose a similar form of practice there would be a public outcry.

At this time, when trustees need to be looked after and educated, it is wrong for professional advisers to avail themselves of an opportunity of limiting and restricting their responsibilities and heaping them on their client trustees, who are usually only laymen. This is particularly relevant in the light of the advent of member trustees under the Act.

We have a professional body, the Institute of Actuaries, that has laid down a draconian code that goes far and away beyond legal requirement and is worse than monopolistic.

It is virtually impossible for any solicitor to advise his client trustees to enter into such letters of appointment and undertakings, for to do so would render the solicitor negligent.

The poor trustee is caught between an adviser, who cannot act without being officially appointed, and his or her solicitor, who will not be able to offer the comfort of solace.

The law was never meant to catch trustees in this way or place them in such a hideous position.

From the solicitor's viewpoint there is a dilemma, because if, on his or her advice a client does not agree to a letter, the client may be penalised – and given the timescales (the letters of appointment must be in place by this week) there is little room for manoeuvre.

This is a subject on which I believe there should be a public debate.