In advance of an expected announcement on the pensions dashboard on Monday, Frank Field has published a letter to Guy Opperman and his Work and Pensions Select Committee and has published the findings of a round table with the “pension industry ” held last week.
This is what Field’s letter says
The Government must make clear that it is going to bring forward legislation to require firms to provide access to customer data. Without compulsion, there will be no level playing field and not all firms will choose to provide data.
2. To make the dashboard happen, there needs to be a secure authentication mechanism to verify the identity of customers, along the lines of the Government’s Verify service. There is a clear role for Government to play in providing this.
3. Independent governance is crucial for ensuring that the dashboard works for customers and can command their confidence. This might involve a board with a mix of consumer and industry representation.
4. There is a risk that, without appropriate regulation, a dashboard could make it easier for consumers to fall victim to scams or bad practice. Data security mechanisms and regulatory protection must be in place before the dashboard goes live.
Might I therefore ask you, as a priority, to give a commitment that the Government intends to legislate to require firms to provide access to customer data for the dashboard? This would enable the industry to start making the necessary preparations.
In this article I will challenge several of the points. They appear to be the work of a lobbying group and they do not represent my views or the views of those who I’ve been working with to provide open pensions.
I do not know who was representing the industry but it was not me and it sounds a closed shop of usual suspects. If you want open pensions – you need open minutes – the meeting appears to have been held under the Chatham House rule – the minutes make no mention of who was even there.
We need IMPULSION not COMPULSION
It is questionable whether compelling trustees, SIPP providers and insurers to provide data feeds to one or many dashboards is a good thing. Compulsion requires primary legislation, there is limited scope for that in the legislative agenda. Compulsion creates adversarial situations where reluctant providers find ways not to do things, rather than motivation to move to best practice. Compulsion needs to be policed, there is no infrastructure in place for that. Compulsion will take time – time is not the dashboard’s friend.
Looking into the minutes it becomes clear why compulsion is considered important
An incomplete dashboard could do more harm than good if people were making decisions based on partial information. For that reason, all pensions needed to be on the dashboard and the roll out period needed to not drag on for too long.
The idea of “completion” is an odd one. It supposes that we can have the total picture of retirement, clearly we cannot. Even if an individual had all the pots and pensions ever earned – displayed on one screen, there is no guarantee of completion. Similarly the idea that not having all the information would “do more harm than good” is nonsense. People want as much information as they can get – true. But to suppose that have the information on a dashboard is silly. If I know that I have money with an organisation that is not linked to the dashboard, I will want to know what I have another way. I do not see how harm can come of having to refer to the odd piece of paper along the way.
What is more, there is no example of compulsion working in recent pensions memory. The pensions charge cap is compulsory but it is not inclusive (doing more harm than good?), auto-enrolment is compulsory on employers but not on employees (and is doing a lot of good), MIFID is compulsory and everywhere it is being abused.
Perhaps the model that Guy Opperman should think about is the disclosure of costs and charges to the LGPS. I understand that in future, if cost and charges disclosure is not made to LGPS by fund managers, those managers will not manage money going forward. The sanction of not being at the party is more powerful than the Government making yet more rules to force disclosure on everyone.
A compelling business case is more likely to get data than a big stick kept in a cupboard.
The Government does have a role to play in the verification mechanism (and data standards)
On this point I am in agreement with the letter. The current system of verification to get to the State Pension is too clunky, many people never get to their information. We spend a lot of money in this country exploring ways to verify who the data owner is, now is the time to turn the public and private spend into best practice.
This was what was promised at the launch of the dashboard project nearly three years ago. That we are still calling for this to be a feature of the Government’s input, is very disappointing.
The provision of a simpler verification system using present day technology is profoundly to be hoped for. The data standards could and should be prompted by Government. As with the CMA 9 – data standards can be worked out quickly and with the consent of all parties, if Government takes a lead.
Giving Government the central role is a stupid idea.
I know where this comes from – it’s coming from a well-meaning source – but putting the governance of dashboards in the hands of Government will atrophy dashboard development.
Again the detail of what’s been called for is in the minutes of the roundtable meeting.
It was generally agreed that providing a pensions dashboard should be a regulated activity….
It was generally agreed that regulation and consumer protections needed to be in place before the dashboard went live, even if early iterations of the dashboard only provided read-only outputs of information to the consumer. All parts of the jigsaw (technology, data feeds and regulation) needed to be at a satisfactory level before the dashboard launched……
Most participants agreed that there should be at least one, non-commercial, ‘public good’ dashboard, likely hosted by the Single Financial Guidance Body, to enable synergies with the SFGB’s pension guidance function.
it was also recognised that there would need to be regulation to ensure consistency of the provision of information across multiple dashboards, via a single pension finder service
None of this sounds remotely like open pensions to me. What is sounds like is a last-ditch attempt by the usual suspects to centralise control of data – governance -regulation and most worryingly of all “the means of production” – through a single pension finder service.
All of these moves should be resisted. They will have the combined effect of putting pension providers back in charge. Giving the pension finder service to a single body would be like making NEST the only workplace pension. Undoubtedly NEST is a good pension but it is the better for having its tail tweaked by other workplace pensions.
Competition does not work by handing a monopoly to one pension finding service. Since it is quite clear what pension finding service the “industry” has in mind, I have to conclude that Frank Field and his team have been lobbied into submission.
Playing the scam card is a smokescreen
The last refuge of this lobby is to play the scam card. To suggest that unless all activity is channelled through a small group (I did not use the word cartel) of providers who limit the scope of the dashboards to “read only” , licence dashboards to regulated dashboard providers and generally deny the public to data on their terms is retrograde and frankly feudal.
If we are ever to move beyond the control of the few trade bodies that dominate the argument , then we need open pensions allowing start-ups to offer fresh insights about pensions. If we want Pen tech as a part of Fin Tech, then we need to stop having closed meetings like the roundtable and we need to have proper public debate.
Though I admire Frank Field and am pleased he has been named parliamentarian of the year for his work in charge of this committee, I think he’s been sold a dummy in this instance. I don’t know who’s idea for this round table was – but it was a bad one. The minutes show it was a very biased meeting that did not represent the interests of those outside the usual suspects.
We need a proper consultation
I am hoping that we will have the consultation both Guy Opperman and Amber Rudd have promised us.
Speaking at the TISA conference a few days ago, Rudd told delegates that the consultation would look for the view of the people.
I hope when she said that – that she meant those people who want to put ordinary people back in control of their pension information. I hope she was referring to open pensions rather than closed meetings.