Danica Pension, Denmark’s second largest commercial pension provider, has been reprimanded by the country’s financial watchdog for trying to influence customers to stay after they had decided to move their pension elsewhere.
The Danish Financial Supervisory Authority (Finanstilsynet, FSA) announced this morning that it had given the Danske Bank subsidiary two official orders (påbud) to act correctly in future, after investigating a case triggered by customers reporting that their requests to transfer their pension plan to another company had been rejected by Danica.
The watchdog’s action comes after PensionDanmark was found to have fallen foul of the good practice rules relating to pension transfers in June.
Ulla Brøns Petersen, head of the Danish FSA’s consumer department, said: “The customer’s interest must always be the heaviest weight on the scales.
“Therefore, the company they are leaving must not try to pull the customer’s decision in another direction unless it is due to overriding considerations of the customer’s interests,” she said.
This could be, for example, if the client were to risk losing important rights by switching, Brøns Petersen said.
“It is not in the customer’s interest if the company uses a request to try to retain the customer with marketing, as we have seen examples of in Danica Pension’s and PensionDanmark’s customer management,” she said.
In those cases, she added, it had been the companies’ interest in retaining the management of the scheme that had carried the heaviest weight.
The first of the two official orders given to Danica Pension is to implement a pensioner’s request for transfer of their pension scheme without contacting the pensioner, unless there is a risk that the pensioner will lose significant rights in the transfer.
The second order tells the provider that if it does contact a customer who has made a transfer request for the latter reason, it must also inform them about any risk of losing the right to an earlier pension payment age if they remain with Danica.
In details of its investigation into Danica’s practices, which was launched in 2018, the FSA laid out exactly how the pension provider’s customer retention department operated.
However, a spokesman for Danica Pension said the firm no longer had such a department.
“The orders have come primarily on the basis of a dialogue which began in 2018, and since then we have changed a lot of things,” he said.
“In recent years, we have significantly changed our approach to customers who are on their way from us, and since 2020 have primarily contacted those customers where we assess the customer to be at risk of losing significant rights if they move their deposit from us,” he said.
“For example, we do not currently have a rescue/retention team,” he said.
The spokesman said Danica agreed that it had to be easy for customers to change pension provider once they had made that decision, but that the decision also had to be made on the right basis.
“We believe that the Danish FSA’s statements over the past few months will help to ensure this across the industry, and we welcome that,” he said.