What "professional trustee" actually means - and why the regulatory framework needs to distinguish between fundamentally different models

I want to pick up the piece I think the industry is still dancing around: what "professional trustee" actually means - and why the regulatory framework needs to distinguish between fundamentally different models.

Not all conflicts are equal.

Every professional trustee has interests in outcomes - LawDeb is no different. We benefit from run-on; a buyout ends our appointment. We recognise that, we declare it, and we act in the best interests of members and sponsors regardless. That is what trusteeship requires and it is what our model is built around. But recognising a conflict and managing it through integrity and transparency is categorically different from a structural situation where a trustee is asked to independently scrutinise advice its own organisation generated.

That is a self-review conflict. It arises when a trustee firm also provides strategic advisory services to the same scheme - investment consulting, actuarial advice, covenant review, fiduciary management, endgame strategy. The trustee is then marking its own homework. Disclosure doesn't resolve it. Internal separation doesn't resolve it. The conflict is in the nature of the task being asked of the trustee, not the intentions of the individuals involved.

This matters because "professional trustee" currently covers three fundamentally different models: genuinely independent firms; integrated advisory businesses where trusteeship sits alongside - or is cross-subsidised by - consulting, actuarial, covenant or fiduciary management work; and sole independent practitioners. These carry categorically different conflict profiles, and the regulatory framework should reflect that.

The LDI crisis showed why this isn't just a governance theory.

In 2022, all DB schemes simultaneously required urgent trustee attention. Trustees needed to challenge advisers, evaluate advice rapidly, and make time-critical decisions across their portfolios. Conflicts that might appear manageable in stable conditions became operationally critical under stress - precisely when independent judgment mattered most for members. A trustee with a commercial relationship with the investment adviser whose strategy was under scrutiny faced a fundamentally different position from one without. That distinction doesn't show up in a conflicts register. It shows up in the room.

Endgame decisions are where it matters most in normal times too.

The landscape has expanded: buyout, buy-in, run-on, superfund, hybrid. For many schemes these are the most consequential decisions their trustees will ever make. A trustee with a financial interest in run-on continuing should declare it - members and sponsors can weigh that. That's manageable.

A trustee whose firm also provides actuarial advice on buyout pricing, or covenant assessment that shapes the funding negotiation, faces something entirely different. They are being asked to scrutinise and challenge advice their own organisation produced. At that moment the trustee's core function as independent overseer has broken down - regardless of disclosure, internal walls, or the best intentions of everyone involved.

The moment to act is now.

I accept this is a pointed argument and others in the market will disagree. I'd rather have that debate openly than watch it get managed away through disclosure frameworks that don't address the underlying problem.

Two regulatory processes are live where this decision will be made. The DWP's governance and trusteeship consultation closed in March - its response, expected later this year, could introduce mandatory accreditation requirements and statutory conflicts standards. TPR's governance paper on trusteeship standards follows from the Corporate Strategy consultation we responded to last week. The two are being developed in close coordination. We made the same argument in our response to the DWP consultation - the two responses are consistent and deliberately so.

That is the moment to define independence structurally, not declaratorily. The industry should make sure the right arguments are on the table.

🔗 Full response and one-page summary here.