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Assessment of risk and harm

Published: 25 October 2022

  1. A key aspect that underpins our approach is how we identify and respond to risks and harm, and prioritise our enforcement action.
  2. Our statutory objectives and corporate strategy guide us in focusing our resources on priority areas for engagement. We take into account the level of risk to our statutory objectives in identifying cases which justify the use of our enforcement powers.

Relevant factors

  1. We consider a broad range of factors to develop a rounded view of a particular scheme’s circumstances, management and/or administration, before making a judgment on the appropriate intervention and/or enforcement action.
  2. These factors may include but are not limited to:
    • size of the scheme liabilities
    • number of members affected
    • type and character of breach or conduct
    • evidence of poor decision making
    • compliance history and any historic risks
    • previous interactions and engagements with us
    • intervention by other regulators or agencies
    • potential complexity and resource intensity of our engagement compared to the impact and the value we can add through enforcement action
  3. We also assess the level of harm or risk of future harm caused to the scheme or member benefits. Examples of features of harm include:
    • any negative impact on the scheme as a whole or any of its members
    • whether the impact of the act is irreversible
    • whether the act has had an impact on the ability of the trustees to appropriately take account of and/or represent the interests of the scheme or any of its members
    • whether the act or conduct has resulted in an increased reliance on the employer covenant
    • whether the act or conduct has increased the likelihood of compensation being payable by the Pension Protection Fund
    • whether the act may pose a significant or systemic risk to our statutory objectives
    • whether the act may undermine public confidence in pensions
  4. Any regulatory action we take is targeted, measured and evidence based. We continue to re-assess our position throughout our investigation and enforcement activity.
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