The introduction of the Pensions Dashboard could compel pension organisations to tackle the letter of authority (LoA) process, with the number of LoAs set to increase eightfold, says The Pension Lab.
The specialist fintech, which has set up the Fix LoA Action Group, said that addressing the issues caused by its manual and cumbersome nature often loses priority to more immediate regulatory projects. However, the introduction of Pensions Dashboards could compel organisations that are not yet digital LoA-ready to have to allocate resources rapidly.
Scott Phillips, CEO and founder of The Pension Lab, said: “There are other priorities facing all key stakeholders, so improvements to the LoA process continue to be relegated, but this needs to change. There are four million LoAs sent every year and due to various conditions and developments like Pensions Dashboards, the number is forecast to increase eightfold.
“Not being ready to address the £442 million that the current LoA process wastes every year is both highly frustrating and understandable. To enable providers, platforms and schemes to allocate priority resources that the LoA process urgently needs, it must come to the attention of the Financial Conduct Authority and The Pension Regulator.”
Billy Burnside, managing director of Criterion, the organisation responsible for creating and maintaining LoA standards, added: “Although some providers have made improvements to their LoA processes, these have mostly been made in isolation and in accordance with their internal processes. The data in the LoA process needs to work for advisers, moving seamlessly between multiple external third-party systems to support ongoing adviser processes if it is to be efficient and this is just one of the benefits that Standards can bring.”