TPR’S new code of practice – a tidy-up exercise or major reform?

May 2021

It’s been two years in the making, but we now have a consultation on the combined code of practice (“CoP”). This long-awaited consultation is looking at how to consolidate 10 of TPR’s 15 existing codes of practice into one online code covering all scheme governance and management.

As Director of Governance Services at ITS, I thought I should take the time to read all the source documents rather than just relying on the very helpful lawyer and consultant notes. Having now gone through the detail myself, I’ve had the chance to reflect on the proposed code and consider the implications it could have for our industry.

Was it really 16 years since the first CoP on “Reporting breaches of the law” was introduced? I was UK Pensions Manager and Scheme Secretary at National Grid at the time and while a lot has changed in our industry since then, I must confess I can’t remember the last time I actually looked at that CoP.

Looking at the new CoP, it’s clear we are going to have to get used to new terminology like “Governing Body”, “Effective System of Governance”, “Own Risk Assessment” – however the latter it would appear is not only doing what it says on the tin.

Other than the new or reinforced elements called out by TPR, such as Investment Stewardship and Cyber Security, this was really just meant to be a tidy-up exercise to address some outdated parts of code as well as a few duplications and inconsistencies. However, it’s worth trustees watching out for the “written remuneration policy” and what seems to be a general direction of travel to make more of the Governing Body’s policies available to members.

As ever the devil will be in the detail and whilst there are 10 codes to consolidate in this first phase of consultation, the 54 pieces of guidance will also need some work. Hats off to TPR for the work invested so far and the open consultation they are currently running – which included a very useful virtual workshop on the new CoP. ITS will of course be responding to the consultation, although perhaps not to all 270 questions!

Over the next few weeks and months, I will be reading it all again and considering how ITS and the schemes and clients we support can best prepare. While TPR has said the CoP only sets out their expectations and is not the law, we know they may still rely on CoPs in legal proceedings – so it’s definitely worth being across the detail.

By John Lovell, Director – Governance Services