Helen Cox, head of pensions group, Clifford Chance
Tim Cox, partner, Linklaters and Alliance
Andrew White, partner, Rowe and Maw
TWO YEARS after the Pensions Act created the Occupational Pensions Regulatory Authority (Opra), the watchdog body is beginning to get tough. Company directors who make consistently late payments are being warned they could face jail if they do not get out of the habit.
But is turning a director into a jailbird the most effective way of solving the problem, or should Opra have its wings clipped? Would the threat of jail have deterred Robert Maxwell from pilfering his employees' savings? How do lawyers who deal with Opra view it, and what suggestions would they make?
Helen Cox, head of the pensions group at Clifford Chance, is so far impressed with the body, although she believes it is time for a slight change of tactics.
"For an organisation starting from scratch, Opra has made a very good start. However, it ought to have more civil powers in place of its criminal ones," she says.
"In cases of non-payment of contributions, it ought to have more flexibility to impose civil proceedings rather than criminal ones, which can be too restrictive.
"Criminal proceedings can be tricky because, by nature, they are all or nothing. Civil law is more flexible."
The creation of Opra has meant Cox has had to dust down some of her old criminal law text books. It's an additional area of expertise to master in an already wide subject area.
"I would have thought the threat of legal action is a deterrent to companies anyway because of the publicity that it creates, so criminal proceedings are unnecessary.
"But it seems Opra is toughening up. In the past, we used to tell clients to go to Opra in a non-arrogant way, and just say they were very sorry.
"As long as you went in with plans as to how you would remedy the breach, and adopted a programme to ensure it wouldn't happen again, Opra was prepared to accept that. But now it seems it is bringing prosecutions, presumably with the idea that there are no excuses."
Linklaters & Alliance pensions partner Tim Cox also believes the watchdog has got the balance right. "Opra has started well and is not being too heavy handed, unlike some new regulatory bodies that can go on power trips.
"But its problems are in part due to the Department of Social Security. For instance, there was a lack of clarity about self-investment and the extent to which company pension funds could invest in the employer's shares. When funds had been in-vested and the shares had done really well, exceeding the five per cent restriction, did the trustees have to rush off and sell them?
"The DSS's knee-jerk reaction to the problem meant self-investment became a criminal offence, which was not really appropriate."
Cox says the process is unwieldy. "Late payments usually occur bec-ause someone has gone on holiday, although the administrative system should be in place to ensure it does not happen. So, sending someone to prison for that is a bit excessive.
"Perhaps there ought to be the option of criminal proceedings for serious repeat offenders."
So does Opra effect anyone other than the disorganised company director? Andrew White, pensions partner at Rowe & Maw, is sceptical: "The threat of prison would not put off the dishonest company director, who is more likely to simply flee the country.
"Opra would not stop the likes of Maxwell, but crooks like that will always get caught sooner or later.
"At the moment, Opra has the power to fine firms as much as u5,000, which is okay because it acts as both judge and jury. But if you go beyond that, the courts need to be involved. Once the proceedings become criminal, it takes so long.
"It should be brought into line with the Financial Services Authority, which imposes civil rather than criminal penalties.
"But so far Opra has gone down well within the profession. I think it's prepared to learn, and it's an approachable body."