‘Breaking Banks: A blueprint for Open Finance that puts customers first’ puts forward a series of recommendations to help create a functional Open Finance ecosystem in a post-Brexit economy. Within the report, COADEC calls for the UK government to break the hold of banks and bring consumer perspectives to the forefront by allowing them instant access to their financial data.
I think this statement definitive;
“Despite often being the largest financial asset that people will have in their lives, there is still no way to get any standardised data in digital form about their pensions. This is completely at odds with our collective need to take responsibility for our retirements, feel a sense of ownership and make informed decisions. Too many people are completely in the dark about how much they have saved, how much they pay in fees, how well their pension is performing – and importantly, will they have enough to last them in retirement. Open Pensions will solve all of these issues and help create a generation of informed, engaged, proud and prepared savers.” Clare Reilly, Chief Engagement Officer, at PensionBee,
‘Breaking Banks’, emphasizes the benefit for consumers of seeing their whole financial world in one place. The report highlights the ability for everyone, regardless of their wealth, to make better financial decisions and receive tailored financial services.
Featuring as a case-study in the report, PensionBee reiterates the ability of Open Finance to transform the pension landscape for the some 52 million adults in the UK with pension savings. Combining banking data with pensions data allows new analysis of individual bank statements and the possibility to set up auto top ups into pension pots, if an individual has surplus income each month – an innovation that could go a long way towards helping solve the chronic under-provisioning in pensions.
By granting the same visibility over pensions as bank accounts, consumers over the age of 55 can make better drawdown decisions as they’re able to see exactly what their money is spent on. This avoids a common misconception among consumers identified by PensionBee earlier this year. The pension provider’s research found that consumers are withdrawing their pension into their current account in order to feel a greater sense of control over their retirement savings, when they would be better off leaving their money invested.
Through Open Finance
Much is made of the risks associated with the free-flow of pensions data. It has dominated the discussion of the Pension Dashboard in Parliament during the passing of the Pension Schemes Bill into legislation.
What is not mentioned is the counter-factual, the cost in terms of frustration and poor decision making, of not having data on which to take decisions. The current frustration shared by millions of people over 50 in the UK, is not being eased by Pension Wise. People are looking for more than generic guidance, they are looking for information that helps them aggregate their pension pots and spend their money wisely.