Upper Tribunal entitled to reach conclusion that it was reasonable to impose FSDs on ITV group companies (Granada UK Rental & Retail Ltd v The Pensions Regulator)

Upper Tribunal entitled to reach conclusion that it was reasonable to impose FSDs on ITV group companies (Granada UK Rental & Retail Ltd v The Pensions Regulator)  

On 20 June 2019, the Court of Appeal handed down its decision in Granada UK Rental & Retail Ltd v The Pensions Regulator, finding that the Upper Tribunal was entitled to reach the conclusion that it was reasonable to impose financial support directions (FSDs) on five companies in the ITV group (the Targets) requiring them to put in place financial support for the Box Clever Group Pension Scheme. The Court of Appeal also agreed that the Pensions Regulator could consider matters and events that occurred before the Pensions Act 2004 (PeA 2004) came into force in reaching its conclusion.

Granada UK Rental & Retail Ltd and others v The Pensions Regulator and another [2019] EWCA Civ 1032

What are the practical implications of this case?

The Court of Appeal’s decision is a victory for the Pensions Regulator and provides further guidance on how it should carry out the reasonableness test under the legislation for imposing an FSD, in particular that:

  • in assessing reasonableness, the Regulator can take account of actions and events which took place before the coming into force of PeA 2004  
  • the absence of fault on the part of the Targets does not necessarily mean that the balance has to come down against imposing an FSD, and  
  • factors relating to retrospectivity (which must be taken into account when assessing reasonableness and may tend against the issue of an FSD) can be outweighed by the factors in favour of an FSD

Ultimately, it is for the Pensions Regulator/Upper Tribunal to decide how much weight to give to the various factors and whether, giving each factor appropriate weight, the imposition of an FSD is reasonable.

However, the Regulator’s victory has come at the cost of expensive and long-running litigation lasting eight years so far (and potentially longer if ITV is permitted to appeal to the Supreme Court). It perhaps comes as no surprise then that there are already plans to introduce measures to strengthen the statutory FSD regime under PeA 2004, s 43,

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About the author:

Zahra started working as a paralegal at Lexis Nexis in Banking and Insolvency teams in April 2019. Zahra graduated with a 2.1 honours in a BA French and Spanish, completed the GDL at BPP University and is seeking some experience before commencing the LPC. She has undertaken voluntary work for law firms in London, Argentina and Colombia.