EUROPE - Pension funds must improve the comparability of fees and products and make more efforts to clearly label products based on risk profiles, the European Insurance and Occupational Pensions Authority (EIOPA) has said.
Speaking at an EIOPA conference on consumer protection, the organisation's chairman, Gabriel Bernardino, said the recent financial crisis had provided an opportunity to rethink certain strategies and policies and called for a "courageous" look at conflicts of interest in the industry.
"We need to question the policy tools we traditionally used to deal with information asymmetries, conflicts of interest and market inefficiencies, possibly by exploring some unconventional approaches," he told delegates attending the event in Frankfurt. "We need a paradigm shift."
He said "unfair practices" that negatively impacted consumers in the pensions market were often down to conflicts of interest.
"In pensions, conflicts can arise when, for example, one provider is responsible for all services to the pension fund," he said.
"We need to reinforce the standardisation and comparability of the information to be provided to consumers, helping them to take informed decisions.
"However, information should not be used to shift responsibility from the providers to consumers."
The chairman proposed the development of a framework to detect "unfair" products, clauses and practices in the insurance and pensions landscape, adding that this could be achieved by soliciting independent opinion on product design, as well as internal governance functions.
He insisted supervision of business should be strengthened and that all relevant authorities have the "capabilities, tools and resources" to regulate.
"The crisis has shown that, in certain cases, supervision has failed by shying away from addressing the problems early enough," he said. "Supervisors failed to be proactive on the 'known unknowns'."