New requirements for sole trustee appointments will seek to eliminate conflicts of interest under a new code of practice published by the Association of Professional Pension Trustees (APPT).

Measures included in the Code of Practice for Professional Corporate Sole Trustees (PCSTs), which comes into force on 1 January 2021, include a requirement for at least two accredited professional trustees to be involved in PCST decision-making processes.

APPT commented that the code “sets out a range of governance and risk controls that sole trustee firms must adhere to, in order to ensure that scheme members’ interests are properly protected”.

Other new measures will also require PCSTs to assess whether they should report to The Pensions Regulator (TPR) if they are removed, or resign, from an appointment as a result of the sponsor company’s actions.

The code has been developed in consultation with TPR and will set out how accredited professional trustees should ensure that their firms adopt robust governance protocols to manage potential conflicts of interest for PCST appointments and maintain independence from sponsoring employers.

The new code will be unveiled at the APPT’s annual general meeting on October 27 and serve as an extension to the organisation’s existing professional standards code, which all accredited professional pension trustees must follow.

APPT council member and APPT sole trustee sub-committee chair, Nigel Hill, said: “A great team of people have invested many hours into codifying the principles of best practice for sole trustees, recognising the need for sole trustees to have proper support and challenge in their decision-making processes.

“For the first time we have a clear benchmark against which regulators, advisers and sponsors can measure the performance of sole trustees. From here on, only trustees signing up to the code should be appointed as sole trustees.”

APPT chair, Nita Tinn, commented: “This new code will ensure that professional trustees operating as sole trustees do so to the highest standards.

“When administered under our rigorous code of practice, the APPT believes that PCST appointments will raise standards across the industry, and we urge sponsors appointing sole trustees to make sure that those they appoint are accredited professional trustees and adhere to the code.”

TPR director for regulatory policy, analysis and advice, David Fairs, added: “We welcome APPT’s Code of Practice for Sole Trustees. It’s important that schemes with sole trustees continue to have high standards of governance and decision making.

"The industry code sets out the additional practices and qualities needed of sole trustees which build on the professional trustee standards.”

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