Figures from across the pensions industry have responded to the Department for Work and Pensions’ (DWP) consultation on trusteeship and governance, raising concerns about the independence of trustees and potential conflicts of interest as the market evolves and consolidates.

The consultation outlined plans to improve the standards of trust-based pension scheme trusteeship, governance, and administration, aiming to ensure trustees had the skills needed to keep pace with the evolving sector.

Several industry organisations raised potential trustee independence concerns, with LCP noting that the move towards larger defined benefit (DB), defined contribution (DC), and collective DC (CDC) arrangements was intensifying commercial pressures.

This sentiment was echoed by TPT Retirement Solutions, which warned that these growing pressures in the professional trustee market risked undermining independence, with private equity ownership structures, cross-selling bundled services, adviser-trustee dependencies, and restrictive tendering practices becoming increasingly prevalent.

TPT therefore called for clearer regulatory controls, including restrictions on self-appointment, requirements for independent tender processes, and limits on bundled commercial arrangements.

These commercial pressures were also raising concerns about conflicts of interest, especially for professional corporate sole trustees (PCST).

The Association of Member Nominated Trustees (AMNT), noted that as the employer ‘buys’ the PCST service, there was a risk of the trustee being pressured to favour employer interests over members’.

It called for mandatory accreditation for all professional trustees and ‘fit and proper’ tests for sole trustees, while LCP recommended an independent appointment process and oversight, especially for PCSTs.

LCP also called for regular independent reviews of PCST performance and governance, and clearer guidance from The Pensions Regulator to support consistent conflict management across the industry.

The importance of lay trustees was also highlighted, with TPT stating that reforms should carefully preserve the contribution that lay trustees make to scheme governance.

To this end, the AMNT argued there should be mandatory member representation in all trust-based schemes, master trusts, and megafunds, with a staged pathway for lay trustees.

ZEDRA also urged the DWP to bring in accreditation for all professional trustees, and said each scheme should have an accredited professional or lay trustee.

It called for a more dynamic model of trusteeship that was underpinned by a clear strategic framework, and the capacity to enable effective and timely decision-making as traditional approaches were “no longer fit for purpose”.

However, the Society of Pension Professionals (SPP) argued that the current trustee framework was working well for the vast majority of members, and said that targeted, risk-based reform was needed rather than sweeping structural change.

The association voiced its support for proportionate governance standards, robust conflict management and clearer delineation between trustees and executive management, particularly in large master trusts and megafunds.

“Trusteeship is one of our longest standing and effective governance models, and this consultation addresses the key evolutions in the market to make sure it remains the model that scheme members can have faith in,” said TPT head of policy, Ruari Grant.

“Consolidation has the potential to strengthen outcomes for savers, but it also increases the importance of robust and independent governance, as well as the expertise to manage ever larger and more complex strategies.

“As schemes grow, and as those providing trusteeship move from an independent, non-profit basis to a more commercial one, policymakers must ensure the right safeguards are in place to make sure trustees are able to act in the best interests of their members, without influence from either commercial providers or trustee firms.”

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