The FCA has published its proposed standards for operators of pension dashboards, outlining its requirements for supervision and enforcement.
In its consultation, the FCA said that pensions dashboard services will help engage and reconnect savers with their pensions savings but noted that without a robust regulatory framework in place, consumers using those services could be vulnerable to harm.
It said its proposals “aim to strike an appropriate balance between protecting consumers and harnessing the opportunities dashboards create to engage savers with their pensions.”
Sarah Pritchard, executive director for markets at the FCA, 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.”
Under the proposals, the regulator said firms must have proper controls in place to manage risks and has proposed to apply its Senior Managers and Certification Regime and its system and control rules on conflicts, risk management and outsourcing. Firms will need to have specific FCA permissions to become a pensions dashboard service
It said its proposals are designed to give consumers trust and confidence in using a pensions dashboard, enable them to understand where and how they can access additional information, impartial guidance and financial advice and ensure consumers are able to continue their pensions engagement journey in an informative and secure environment.
It also expects users of pensions dashboards to receive fair value and be made aware when and how they are paying for services, as well as have a clear and easy route to redress should things go wrong.
Nigel Peaple, director policy and advocacy at the PLSA, commented: “The publication today of draft rules and standards which Qualifying Pensions Dashboard providers must adhere to are a welcome next step towards making dashboards a reality. Industry and consumer groups will need to assess the proposals in detail before feeding back on the consultations.
“However, it is essential that dashboards are safe for savers so, now, more than ever, everyone should focus on doing dashboards well rather than quickly. 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.”
Rachel Vahey, head of policy development at AJ Bell, said: “Developing robust and useful pensions dashboards has been a massive project for government requiring much resource and time. To be a success, though, means people have to use them. Just having one single dashboard run by the Money and Pensions Service was never going to achieve wide-spread appeal. Instead, government is putting its faith into building a network of different and varied places where people can access a dashboard and search for lost pensions.
“The FCA is demanding high standards from PDS firms. It will keep an eye on firms through its own monitoring as well as information received from MaPS. In addition to following strict rules when exporting data, PDS firms will have to follow the pensions dashboards standards and display signposts and warnings every time a customer uses a dashboard service. However, firms will have the freedom to format these messages in the best way to suit their customers, in line with Consumer Duty principles.
“The Pensions Dashboards have been a long time coming, but in less than two years they will be here. The government is placing a lot of faith in them revitalising the nation’s engagement with pensions and these FCA rules show how that can be achieved.”
