Part 1: Master Trusts Chapter 2: Authorisation: applications etc. Section 3: Prohibition on operating a scheme unless authorised
Section 3 sets out a general prohibition - that a person cannot operate a Master Trust unless that scheme is authorised. To become authorised the Pensions Regulator must be satisfied that the scheme meets certain criteria which are set out in section 5(3). A scheme is considered to be operating in the market when it takes pension contributions from employers and employees, receives fees or enters into contracts with employers (section 3(5)). An example of this is where a scheme agrees to provide a scheme for automatic enrolment purposes to an employer.
	Section 3(2) provides that if an individual does operate a Master Trust that is not authorised, they may be subject to a civil penalty under section 10 of the Pensions Act 1995.
	Subsections (3) and (4) of section 3 provide that where the Pensions Regulator becomes aware that a Master Trust is operating without authorisation, it is required to issue a notice to the trustees of the scheme. This notice must set out that the scheme is not authorised and as a result there has been a triggering event (see section 22) and that the scheme is required to pursue the first continuity option (see section 24).