Automatic enrolment  

Advisers face wave of auto-enrolment complaints

Advisers face wave of auto-enrolment complaints

Employers and their advisers could be hit with a wave of complaints about errors around auto-enrolment, according to a compliance expert.

Mark Ellis, director at auto-enrolment auditor Sanctum Software, warned there was indication of widespread failings in employers ensuring their staff are correctly auto-enrolled with system failures and human error contributing to the problem.

A survey he carried out among 17 advisory firms at the early stages of auto-enrolment about two and a half years ago found 59 per cent thought employers were getting auto-enrolment wrong from a systems point of view.

A further 26 per cent of the advisers thought consumer detriment would be caused by the failings.

Mr Ellis spoke an event held by the Transparency Taskforce in London last week (8 March).

He said: "The complexity of auto-enrolment is the problem. In the early days there were some problems with the systems but a lot of those were sorted out. The vast majority of issues are human error."

He believed the majority of firms had managed to stage their employees correctly but the focus was somewhat lost in the months after when responsibilities were largely handed to payroll departments, which then lost control.

Mr Ellis said he had come across one case where problems began after the person looking after auto-enrolment left the firm.

He said: "From that point over a period of 16 months it was all done incorrectly until it came to light."

Another firm was found to have staged staff wrongly from the beginning, ending up with liabilities of half a million pounds involving 500 members of staff.

Mr Ellis said: "This is about people getting it wrong despite on the face of it being compliant from the point of the regulator saying yes they have done things."

Tristan Mander, associate and head of pensions at law firm Ward Hadaway, said the problem was the declaration of compliance given by firms to the regulator does not cover whether they did it correctly, it just says they did it. 

He said: "In most cases my (due diligence involvement) is quite simple - it is just (asking them to) convince me they have done it right. 

"In most cases they can provide me with a declaration of compliance but after that they have got no idea where the paperwork is or who is dealing with it, how it works, because it was set up as a project at the start.

"The person who put it in place did so more or less right but after that it is lost. 

"I come across problems far more often than I ought to and while an auto-enrolment problem seems trivial to start with it can get pretty big if it goes on over a long period of time."

In a statement to FTAdviser The Pensions Regulator said: "Employers have a legal duty to complete their declaration of compliance to show us what they have done to meet their legal duties. It is a criminal offence to provide false information on the declaration of compliance.