The Financial Conduct Authority is seeking views on its approach to try and ensure value for money across all defined contribution (DC) schemes in the UK.
This week, the regulator issued a consultation document outlining how it plans to make trust and contract-based DC plans disclose fees and charges to members, the latest in its work towards ensuring value for the end customer.
The consultation follows a review from the UK’s Office of Fair Trading on whether there is true competition in the market, and work by the regulator and government agencies on fairness across the sector.
In the paper, the FCA said it wanted to ensure scheme members could find the information about costs and charges they required to establish “that they receive good value for money from their pension scheme and it will meet their needs for future retirement”.
To do this, the FCA said it was compelled to ask those responsible for providing pensions – including asset managers, pension providers, trustee boards and advisers to trustees and companies – to adequately illustrate the range of costs and fees that may impact a savings pot.
The document said: “Our proposals are designed to ensure that scheme members can access better information about costs and charges, promoting more effective competition between firms in the interests of consumers.”
The FCA said that, in turn, greater transparency about costs and charges could lead to workplace pension schemes being better held to account by their members, which would improve the orderly operation of financial markets.
Rona Train, partner at Hymans Robertson, said the consultation was an “important step forward in levelling the playing field between trust and contract-based arrangements”.
“Requiring the disclosure of costs and charges for all DC arrangements makes comparisons across products more simple,” said Train. “However, what we really need to see in addition to this is full disclosure of the way bundled charges are made up. For example, how much is attributable to investment fees, platform charges and administration costs?”
Train said this would be a “welcome advancement” in the move towards greater transparency.
The consultation will close on May 28.