The right to silence

?The removal of the right to silence in the Pension Schemes Act 2021, and the introduction of potentially heavy criminal and quasi-criminal sanctions on trustees, sponsors and advisers may require a re-think of the optimal way to respond to regulatory interventions. This note is an early draft, given that the Act has yet to be brought into force, some of the regulations have not been issued, and there is little practical experience of regulatory practice under the new regime.

?Background

Every ancient American crime film is a lesson in US constitutional law. ‘I plead the Fifth,’ says Kim Basinger or Edward G Robinson, when about to be beaten up in the interview room by the pre-BLM cops dressed in double-breasted suits. In other words, suspects have the right under US law (the fifth amendment to the US Constitution) not to incriminate themselves (as some say) or to remain silent (the preferred version). It did, incidentally, need that amendment to the Constitution to bring in the right; it is possible it did not exist as a basic protection beforehand, and the US Supreme Court has partly limited its extent in recent years.

In England we also have the right to remain silent when being interrogated by the authorities – and it was specifically provided for in the Pensions Act 2004 in relation to TPR inquiries. But in practice an upstanding citizen, one who has done no wrong, feels impelled out of common courtesy and civic obligation not to insist on exercising their right. They want to help the police or the regulator perform their jobs. After all, the police are an essential service, needed to protect us against villainy of all sorts. We pay for them through our taxes, so we should assist them however we can.

Even so, defence solicitors in ordinary criminal matters will often advise that interviewees should simply say ‘no comment’ to every question, even if they are wholly innocent, and even if they wish to be a good citizen. There are serious risks in being co-operative. A lecture by a US law professor (James Duane, Don’t talk to the police, watchable at https://www.youtube.com/watch?v=d-7o9xYp7eE, entertaining and instructive) explains why talking to investigators can expose you to unexpected liability even in the most benign of circumstances. It is a US-centric lecture, but the principles outlined in it are relevant nonetheless.

We do not have a formal constitution in England, so we cannot plead the Fifth. But we do have a right to silence; it developed in the seventeenth century as part of the common law. It was invented or introduced by the judges as being a fair and balanced way of protecting individuals against an over-mighty state. Even In the middle of a world war, the Court of Criminal Appeal (R v Leckey (1943) CAR 128) said: ’ ... an innocent person might well, either from excessive caution or for some other reason, decline to say anything when charged and cautioned, and if it were possible to hold that out to a jury as a ground on which they might find a man guilty, it is obvious that innocent persons might be in great peril.’

The right was modified a few years ago by statute, so that the courts can regard information that is relied on for the defence during the trial but not mentioned at the interview as being somewhat tainted. That is reflected in the current caution which is given to suspects, which again is repeated in virtually every UK TV police drama: ‘You do not have to say anything, but it may harm your defence if you do not mention, when questioned, something which you later rely on in court. Anything you do say may be given in evidence.’

There have been some post-war exceptions introduced in relation to the right to silence. The Financial Conduct Authority can impose fines if you do not reply to their inquiries; and you must disclose your data encryption key in terrorism cases.

Similarly the Serious Fraud Office in corporate fraud cases has the right to require questions to be answered and/or information to be provided. Under the Criminal Justice Act 1987 s2 it can serve a notice to require the person under investigation (or any other person whom there is reason to believe has relevant information) to answer questions or provide information with respect to any matter relevant to the investigation at a specified place, either at a specified time or forthwith. Like information recovered in pension cases (see below) information gathered compulsorily by the SFO under this power cannot be used against the person giving it – but it can be used as a roadmap to other information which can indeed be used against that person.

The right to silence in corporate fraud was removed; s2(2) makes it compulsory to answer questions. And, if you do not, a failure to comply, without reasonable excuse or you provide false or misleading statements (either knowingly or recklessly) is an offence punishable by up to six months' imprisonment for failure to comply or up to two years' imprisonment for providing false or misleading information and/or a fine.

But until recently the right to silence has categorically existed in pensions cases. The Pensions Act 2004 s72(1B) provided (it’s pretty short, so non-lawyers read on) ‘Provision of information: The Regulator may not require a person to answer any question or furnish any information which might incriminate the person or, if that person is married or a civil partner, the person’s spouse or civil partner.’

The right to silence in pensions matters

s72(1B) has been removed by the Pension Schemes Act 2021 so there is no longer any statutory protection of the common law right to silence. On the contrary, a new s72A says ‘Interviews: (1) The Regulator may, by notice in writing, require any person to whom s72(2) applies [ie anyone] to attend before the Regulator, at a time and place specified in the notice [ie usually at their offices in Brighton] to answer questions and provide explanations on one or more matters specified in the notice, to answer questions and provide explanations on one or more matters specified in the notice that are relevant to the exercise of any of the Regulator’s functions.’ It is an offence if you do not answer questions. And this applies not only to trustees, but to plan sponsors – and their advisers, including lawyers where the usual defence of legal privilege is limited.

There are now (at least) three kinds of interviews which The Pensions Regulator can ask you and your advisers and service providers to be involved with:

·???????A purely voluntary interview

·???????A non-compelled interview

·???????A compelled interview, under caution.

Each of these has different implications for trustees, sponsors and advisers.

Interviews

Voluntary interview

A voluntary interview is what it says on the tin. You will get a letter, or an email (usually encrypted, so it’s hard to detect whether it is a cyber-attack, and there is no phone number on TPR’s website to check first). You do not have to attend such an interview, and nor do you have to answer all or any of the questions put. Some interviewees prefer in practice to have a compelled interview, which overrides their confidentiality obligations to clients or employer. In a voluntary interview, any information you provide is available for the regulator to use in any future prosecution, unless you obtain a prior indemnity.

A compelled interview

The Regulator can compel you to be interviewed, and you cannot refuse to attend. The advantage for you is that any answers given in this form of interview cannot be used against you in criminal or quasi-criminal proceedings. Again whether you have to answer the questions is complex. The revised Pensions Act 2004 obliges you to be responsive, with penalties if you do not respond – but it seems (see below) that such penalties may themselves be illegal. And if you give wrong information in such an interview, you can be prosecuted for that (see FSA v Daniel Forsyth, 2015). If you refuse to attend or respond, you might be subject to a disciplinary action (in the case of the FCA) because of a breach of the Statement of Principle 4 for Approved Persons, although again it is not certain that such a provision is itself legal. Similarly TPR may regard you as being not fit to be a trustee if you do not follow their wishes. It might be thought that there is no risk in being co-operative in such an interview, because of the fact that your answers cannot in future be used against you – but that is in relation to criminal rather than regulatory infractions, and it does not exclude information which the prosecutor finds out about elsewhere but through your answers.

A compelled interview, under caution

If the Regulator considers there has been a criminal breach it has the right to require an interview under caution, under the Police and Criminal Evidence Act (PACE). TPR conducts such interviews under PACE, the rules for which are not repeated here. You will need to see the documents produced well in advance (a couple of days is usually not enough in a complex case) and it might be better to reply ‘no comment’ until you have had time to review the documents and refresh your memory, perhaps by reference to other documents.

You do not have to attend a PACE interview on a voluntary basis (unless you wish to) but if you do not, the regulator may arrest you and subject you to a compelled interview – and you do not generally have the right to legal aid. If this is likely to be a possibility, you should check your D&O insurance policy, and carry a copy of it around with you at all times – together with a solicitor’s phone number to call and the D&O insurers contact details. This is likely to be an expensive and distressing episode.

Whether the interview is ‘voluntary’ or under arrest, you do not have to answer questions, although as the caution mentions the court may draw an adverse inference. That may be a price worth paying, and in any event the inference may be refuted in the circumstances.

Human rights law

The right of a regulator to insist on answers to its inquiries has been questioned in a recent court decision of the European Court of Justice. European Court decisions after Brexit of course no longer have direct effect in the UK, but they may be influential and persuasive in English courts – and in this case the decision was based more on human rights law (which still applies in the UK) than on EU law.

The decision, (DB v Commissione Nazionale per le Società e la Borsa (Consob), 2 February 2021, Case C 481/19) was a request for a preliminary ruling following the conviction of an Italian securities trader for market abuse. The court decided that the right to remain silent and to avoid self-incrimination based on provisions of the Italian Constitution, EU law and on international law, cannot justify a refusal by the person concerned to appear at the hearing ordered by Consob nor delay on the part of that person in appearing at that hearing, provided that the latter’s right not to answer the questions put to him or her at that hearing is guaranteed. However, there was said to be no such guarantee in the DB case.

The right to silence cannot reasonably be confined to statements of admission of wrongdoing or to remarks which directly incriminate the person questioned, but rather also covers information on questions of fact which may subsequently be used in support of the prosecution and may thus have a bearing on the conviction or the penalty imposed on that person (see Saunders v United Kingdom, ECtHR, 17 December 1996, CE:ECHR:1996: 1217JUD001918791, § 71, and Corbet and Others v France, 19 March 2015, CE:ECHR:2015:0319JUD000749411, § 34). That said, the right to silence cannot justify every failure to cooperate with the competent authorities, such as a refusal to appear at a hearing planned by those authorities or delaying tactics designed to postpone it.

Conclusion

The introduction of heavy potential criminal and quasi-criminal penalties for trustees, sponsors and advisers, coupled with the purported removal of the right to silence, has changed the regulatory landscape. It requires a re-think of how to respond to regulatory interventions, balancing protecting individuals and corporates from personal exposure with the natural inclination to help the authorities. Pensions is now likely to see over time a growth in white collar crime cases (see Barney Thompson, ‘White-hot’ business crime sector builds a case for law firms hiring spree, Financial Times, 17 December 2018).

You may be relaxed about turning up for an interview if the regulator asks you to, although whether you need to travel to Brighton, with all the added expense that might involve in terms of legal costs, is unclear. A local police station is probably acceptable if you ask. You should also think about the human dynamics. You may be stressed even in a one-to-one interview; it is stress-plus when there just you on your own trying to field questions from half-a-dozen interrogators, however domestic the atmosphere.

You will need to decide beforehand whether to be open or cautious, given the risks in either strategy in answering the questions. It is might be best to ask for the questions in writing, and for full early disclosure of the regulator’s documents that it is interested in, than participate voluntarily in an oral examination where it is all too easy to say things you may not mean in the stress of the situation. You can always respond in writing. The threat of penalty for failure to respond to oral questioning is almost certainly inapplicable, and the downside of refusing after caution may be manageable and explicable.

Of course, you might feel that helping a regulator in the way they request might make an expensive problem go away. Or you might think that such a response is na?ve, given experience of regulatory interventions in the past. Whichever approach you prefer to take, it is critical that you:

·???????do so with a lawyer at your side. ?And

·???????prepare well before any interview in which you have decided to answer questions. And

·???????have a decent insurance policy to pay for it all. You will be astonished at the costs of all this.