One of the consequences of the pensions mis-selling scandal of the 1990s has been a long tail of distrust between occupational trustees and their advisers and advisers regulated by the FSA.
This distrust has been in evidence throughout the debate on ETVs and informs on the current debate on employee engagement. It permeates much of the discussion on the swtich from DB to DC and the recent trend to introduce insured platforms to manage DB assets.
I would argue that much of this distrust is unwarranted and has created an unhelpful prejudice against independent financial advisers, the FSA and insurance companies.
Infact, the past ten years has seen a largely unheralded revival in the influence of “insured solutions” whether contract based or as trustee investments. We can forget that pooled funds are almost invariably insured while the vast majority of assets within DC plans are offered within insurance policies.
It was surprising that the FSA were totally absent at the NAPF Benefits Conference either as speaker, exhibitors or as delegates.
This is disappointing as they have much to say on many of the key issues facing trustees and corporate sponsors. Judging by questions from the floor at debates and from conversations between myself and other delegates it would seem that many involved in acting as or advising to occupational trustees are unaware of the FSA’s recently published code of practice “Treating Customers Fairly” or TCF.
The FSA define TCF in terms of six outcomes
Outcome 1: Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture
Outcome 2: Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly.
Outcome 3: Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale.
Outcome 4: Where consumers receive advice, the advice is suitable and takes account of their circumstances.
Outcome 5: Consumers are provided with products that perform as firms have led them to expect, and the associated service is of an acceptable standard and as they have been led to expect.
Outcome 6: Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint.
The broad thrust of TCF could be described as the imposition of a Duty of Care on Providers and Advisers that harmonises the objectives of the FSA and the Pensions Regulator. Surely these can be accepted by trustees?
The improvements we have seen in the behaviour of insurers and advisers over the past ten years, coupled with the extension of their sphere of influence, should have led to a closer working relationship between the ABI, NAPF ,tPR and the FSA.
Nowhere is there more need for closer collaboration than in understanding respective positions on “advice” and “guidance” to those who have rights from occupational pensions. While the conference heard from Australians, American and Europeans on their perspectives on workplace education, the central question “who can say what” to our members remains ill-defined.
The ball really is in the FSA’s court here and I hope that they will take time, despite their current restructuring, to clarify how TCF applies in the workplace and how it will encourage better co-operation between the various stakeholders involved in workplace savings schemes.
Interesting Article. I have long marvelled at the total disconnect that exists between the insured and advisory sector and the large pension schemes pensions establishment represented at least in part by the NAPF.
It is clear now that the end-point for almost all DB pension liabilities will come in the next 20 to 30 years in the form of buy-out and I entirely agree it is time for the different parts of the industry to come together.
The FSA and tPR have failed to regulate the worst extremes of the ETV market and this must have been caused at least in part by a lack of understanding of exactly how this market has developed and is being promoted.