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Hidden husband and wife conflict of interest revealed for winning candidate

Last week almost unreported MPs on the Commons Work and Pensions Committee approved the appointment of a new chair of the Pensions Regulator. It went to Sarah Smart -already the interim chair.

Nothing particularly newsworthy in that. But the report from MPs went on to disclose the dearth of interest in this important job and expose until now a hitherto hidden serious conflict of interest that affects the entire board of the Pensions Regulator.

The regulation of private pensions in the private sector affects tens of millions of people. As the report says:

Its main responsibilities include:
a) Ensuring that employers put their staff into a pension scheme (known as
automatic enrolment) and pay money into the scheme;
b) Protecting people’s savings in workplace pension schemes;
c) Improving the way that workplace pension schemes are run;
d) Ensuring that employers balance the needs of their pension scheme with growing
their business;
e) Reducing the risk of pension schemes ending up in the Pension Protection Fund,
a statutory fund which protects members of defined benefit pension schemes if
their scheme becomes insolvent.

Pension scams

It also pays a role in keeping an eye on pension scams and firms going bust leaving people without proper pensions. The MPs say they have previously been concerned about its role in some high profile cases involving defined benefit schemes whose sponsoring employer had become insolvent. ” We ourselves have expressed concern this year about
TPR’s capacity—working alongside other regulators—to tackle pension scams effectively.” These cases include tax exile Sir Philip Green’s treatment of the British Home Stores Pension Fund and the British Steel pension fund.

Therefore it is rather shocking to discover that this £75,000 a year part time job for the public face of the Pensions Regulator attracted just eight applicants – and that was after extending the application period. Three were not worth interviewing. Of the remaining five who were interviewed – three were thought to be inappropriate for the job. This left the choice of just two people – Sarah Smart and another.

Indeed so low were the number of applications that the Department for Work and Pensions can’t provide a breakdown of the gender, disability and ethnicity of the applicants – for fear that it will end up disclosing who applied.

But worse was to follow. Sarah Smart’s application for the job disclosed that her husband Fraser Smart was chief executive of British Airways Pensions and chair of British Airways Pension Investment Management Ltd – the body responsible for investing the money of thousands of employees of the airline. The BA Pension scheme is one of the bodies Sarah Smart is supposed to supervise- an obvious conflict of interest with her husband as chief executive of a blue chip company pension scheme.

She has promised that her husband will resign his job before September and not take any other job involving managing a pension scheme.

It was then discovered that NONE of the members of the board of The Pensions Regulator have to declare whether their partners or close relatives run company pension schemes – which has forced a review of the code of conduct of the regulator.

Ministerial interest in the running of the Pension Regulator is virtually non existent. Guy Opperman, the pensions minister, couldn’t be bothered even to meet the new chair before he appointed her. As the MPs say in their report:

“We were surprised to hear that Mrs Smart had not met the Pensions Minister before being chosen for this role. We urge them to arrange a meeting at the earliest possible opportunity.”

The MPs also fired a warning shot about the conflict of interest: “We are conscious, however, that—given wider economic uncertainty—her spouse’s situation may change. In that event, we would urge TPR, the Pensions Minister and Mrs Smart herself to consider whether she can remain in her role.”