UK. Industry organisations call for ‘urgent’ clarity on pensions dashboards
Industry experts have argued that “regulatory certainty” around pensions dashboards is needed as quickly as possible, with concerns over the timing and implementation of pensions dashboards emerging ahead of the first scheme staging deadlines.
The Financial Conduct Authority (FCA) and Pensions Dashboards Programme (PDP) recently held consultations to gather views on proposed design standards for pension dashboards, and the regulatory framework for operators, both of which closed today (16 February).
However, whilst the consultations were broadly welcomed by industry experts, concerns around the proposed framework have since emerged, with the Pensions and Lifetime Savings Association (PLSA) stating that although the proposed standards are a “good start”, they will need to be flexible as user testing informs communication approaches.
In addition to this, the PLSA argued that while certain key concepts and data must be consistent across dashboards, dashboards need to retain the ability to tailor their communication approach to specific demographics.
PLSA director of policy and advocacy, Nigel Peaple, stated: “We are glad that the regulatory proposals and design standards put forward by the PDP and the FCA prioritise the reliability and security of data displayed on pensions dashboards, as well as the importance that savers understand the information being presented to them.
“Saver protection is paramount and the PLSA welcomes the high bar for authorisation of pensions dashboards firms proposed by the FCA.
“It is vital that the information savers see on dashboards is presented clearly and objectively and does not influence their decision-making in a harmful way.
“The standards proposed by the PDP and are a very good start, but they will need to remain flexible as real-world experience from extensive testing informs communication approaches.”
Indeed, the Pensions and Administration Standards Association (Pasa) also previously raised concerns that the lack of test dashboards has made it “near impossible” for the pensions industry to feedback on dashboards’ design proposals, arguing that “very extensive” user testing is needed.
More broadly, the PLSA also emphasised the need for collaboration, calling for quarterly reporting before the dashboards available point from the PDP, Money and Pensions Service, industry, government and regulators, to ensure “full clarity” on any progress.
However, the PLSA welcomed the FCA’s proposals around consumer protections, welcoming the high bar for authorisation of pensions dashboards firms proposed by the FCA, as well as the restrictive controls around data export.
“We flagged in our submission on dashboard standards in 2022 that our members were concerned about the security of exported data, and we are confident that restricting this to firms within the same group as the Pensions Dashboard Service (PDS) firm will go a long way to providing confidence over such concerns,” the response stated.
However, National Pensions Trust head, Paul Armitage, raised concerns that only allowing data to be exported from the PDS to the individual, or a regulated entity that also offers a PDS as part of the same group may create a “two-tier system, distort competition, with the potential for consumer harm”.
Armitage stated: “Dashboards will change the way people interact with their pensions. They are a force for good, but robust regulation is needed to ensure they are a success.
“The FCA’s consultation on the rules for dashboard providers gets us most of the way there, but risks creating unintended consequences in how occupational schemes can best help and support their members, with the potential for consumer harm as a result.
“Given the tools and calculators offered by occupational pension schemes, we would like to see export of data from the PDS allowed to occupational schemes authorised by The Pensions Regulator where they use the services of a regulated PDS through a third party, as would be the case for an FCA regulated entity that is also offering a PDS.
“Many pension savers have a strong connection with their occupational pension scheme and use tools, calculators and financial wellbeing services supplied free of charge by their scheme to help them plan.
“Not allowing members to export data into these tools and calculators risks undermining what we are trying to achieve in helping savers plan for their retirement and, in our view, is a missed opportunity in the construct of the dashboard regulatory environment.”
Adding to this, Isio head of pensions administration, Girish Menezes, warned that until there is greater clarity, it will be “very difficult for firms across the industry to adequately prepare”.
He continued: “Time is tight for third party administrators, who must make a vital decision about how they connect with the dashboard ecosystem, either directly or via an ISP.“Some pensions administrators will be connecting to the ecosystem as early as Q4 this year and most by Q1 next year. Many will be connecting via an ISP service, which provides the layer necessary to deal with the large number of queries that are being predicted.
“But administrators currently have very little visibility of what the user journey for the dashboard will look like, which means they will likely have to make critical decisions blind.
“For administrators, the decision on which ISP to connect with constitutes the beginning of a long-term partnership and significant investment.”
Menezes stressed that firms won’t want to make this decision without regulatory certainty around how dashboards will operate, and therefore what kind of experience they will be required to deliver for pension scheme members, agreeing that “they will have little or no time for adequate testing”.
In light of this, he argued that it is “vital” that the pensions industry has regulatory certainty as quickly as possible, explaining that administrators need adequate time to onboard, test and learn with the fundamental systems that will underly the dashboard project.
“This will be critical to ensuring that they deliver something truly innovative and ultimately valuable to scheme members,” he added.
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