The UK’s Financial Conduct Authority (FCA) has started a consultation along with the Pensions Dashboards Programme (PDP) on standards for operators of pension dashboards, and set out requirements for providers of non-workplace pensions with the aim to improve engagement.
Pension dashboards (CP22/25), CFA’s proposed regulatory framework for pensions dashboard service firms, will provide consumers with easier access to information about their pension savings.
The FCA has set out its approach to supervision and enforcement for dashboard operators, including on fees, regulatory reporting, record keeping, prudential requirements and conduct rules.
Under these proposals, dashboard operators will be able to offer savers additional services that improve engagement with pensions provided they meet rigorous conduct standards. These services could include investment advice (including robo-advice) or guidance, as well as provide models, calculators and other similar tools.
Sarah Pritchard, the FCA’s executive director for markets, said: “Pensions dashboards will give savers better access to their data, helping them make better decisions for their retirement. Our proposals will encourage innovation while ensuring that we have the right rules in place to protect consumers.”
The FCA has also set out final rules requiring non-workplace pension providers providers to offer consumers a default investment option, to support those struggling to make a choice (PS22/1: improving outcomes in non-workplace pensions). Providers can continue to offer wider options for more engaged consumers.
Under the rules, savers will also be warned about the risk of inflation eroding the value of significant and sustained levels of cash holdings. Firms will have 12 months to implement these rules, but given the current levels of inflation, the FCA is encouraging providers to send cash warnings now.
These publications are the FCA’s latest steps to make sure savers are able to access value for money pension products and are supported in their decision-making as they build and access their savings pot.
Much of the dashboards debate this year has been on schemes’ compliance with the new regulations and data standards, said the Pensions and Lifetime Savings Association (PLSA), adding that it is “pleased to see the spotlight now turning to the saver experience too”.
These controls over dashboards, operating in combination, and together with the existing Qualifying Pensions Dashboards services (QPDS) requirements in the Department for Work and Pensions (DWP) regulations, will be crucial for ensuring savers are properly protected when they attempt to digitally find and view their pensions, once dashboards are launched, the Association suggested.
Nigel Peaple, director policy and advocacy at the PLSA, said that it would be “essential that dashboards are safe for savers so, now, more than ever, everyone should focus on doing dashboards well rather than quickly”.
He added: “Even after the new rules and standards are settled in the summer of 2023, extensive user testing will be required to ensure they work in practice. We anticipate at least 12 to 18 months’ of user testing will be needed from the summer of next year before Dashboards can be launched to the public.”