Transferring pots is a matter for the FCA and not MAPS

As Sue Flood and any of the victims of ARK and other pension liberation schemes will know, scammers focus on easy money. Until recently, DB transfers were easy money for scammers. Even with the rules surrounding advice, money flowed out of DB plans into DC plans which were at best unsuitable and at worst illegal.

It is still possible for scammers to operate in the DB market though it is a lot harder. The shame of Stephen Timms’ amendment is that it wasn’t in the Pensions Act 2008.

Better late than never.

More problematic

I am relying here on secondary sources (Pensions Expert) but I understand that moves are afoot to require guidance in all cases where people are looking to move money from pot to pot.

“This amendment enables regulations inserted under section 95(6ZA) of the Pension Schemes Act 1993 to prescribe conditions about obtaining information or guidance from persons such as the Money and Pensions Service, before the trustees or managers may act on a member’s application under section 95″.

As far as I can see , this is a separate amendment to that mentioned at a Prospect pension webinar by Stephen Timms. It appears to refer to the rights of anyone holding pension monies on behalf of someone else (trustees and managers) or so this is interpreted by Tim Smith of Herbert Smith Freehills.

“It could also help savers looking to do pension switching or to transfer from a workplace pension into a personal pension scheme”

This on a day when the DWP are threatening to remove the flat fee from small pension pots suggests that the direction of Government policy is to protect the status quo and to discourage pot consolidation.

Clearly this is not what the public wants. Approval ratings for a pension finding service and for the presentation of pots on a dashboard are through the roof. The public cite dissatisfaction in having lots of small pots and the managers of small pots express dissatisfaction at having to manage them (at any cost).

Referring all pension transfers through guidance is also problematic. There is not sufficient resource within MAPS to meet this demand and since MAPS is the only part of Government providing guidance, the question is where guidance can be found in the private sector. Guidance is not a regulated activity as defined by PERG 10 and the FCA’s paper on this suggests that the “regulatory perimeter” stops at advice.

In my opinion, the Lords would be ill advised to require guidance. There have been attempts to require people to use Pensions Wise before exercising pension freedoms and they have been rejected on the basis that that isn’t freedom. But it had better be remembered that most financial transactions in the retail banking sector are now being taken online.

Instead of making it harder for people to consolidate, the Government should be making it easier for people to understand what pension pots should be safeguarded and what pension pots are transferable.

And this can be done by tagging and flagging by those being requested information , those inter-mediating and those receiving transferred funds (the latter two functions generally being integrated).

Better information digitally delivered

The direction of travel is towards dashboards, towards the free flow of data across the pension data gatherers and towards the consolidation of small pots into bigger pots. All of this is likely to happen under the auspices of the FCA as they will regulate dashboards.

Taking part of these activities  away from the FCA and requiring people to use MAPS or some yet to be defined guidance resource is simply complicating what is a complicated world of consumer choice,

Sun Pension Pot

the mysterious pension pot


About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to Transferring pots is a matter for the FCA and not MAPS

  1. Brian G says:

    Totally agree Henry. There is a major difference between consolidation and scamming. There is just no way that it is sensible for people to take guidance from Maps about this sort of activity. For a start Maps won’t be able to give clear guidance if the consumer does not have information about charges, fund choices, options, guarantees, protected tax free cash etc. For small pots the cost of advice outweighs the benefits of taking that advice we need more information about all schemes provided in a standard format by ALL providers about ALL schemes.

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