This is how the National Audit Office introduced their last report on regulating to protect consumers. That was in March 2019.
UK households spend a total of around £140 billion a year in bills on water, energy and telecommunications, and fees and charges in financial services. These sectors provide services that are critical for security, well-being and social participation, which consumers purchase directly mostly from private companies. Each sector is overseen by a regulator to ensure that services are provided in a way that meets public policy objectives, including that markets work well for consumers.
The four main regulators of these sectors – Ofwat, Ofgem, Ofcom and the Financial Conduct Authority (FCA) respectively – were set up to be directly accountable to Parliament, independently of government. Their long-term high-level objectives are set out in statute, including a primary statutory duty to protect the interests of consumers.
Government, Parliament and consumer representatives have expressed concerns about whether these sectors are working as well as they can for consumers, raising questions about the effectiveness of the regulators. In protecting the interests of current and future consumers, regulators have to consider the often-competing needs of different stakeholder groups.
The outcomes regulators are seeking to achieve can also be affected by a range of factors over which they have limited influence, such as droughts or changes in the wholesale cost of energy. Faced with these challenges and differing views over their effectiveness, it is vital that regulators measure and report transparently their intentions and achievements in meeting their duties towards consumers.
It’s timely that Pension Bee come out this morning with research that shows how far financial services is falling behind consumer expectations
New research from PensionBee, finds that difficult processes deter pension savers from switching, more than any other essential service.
PensionBee discovered that only 26% of consumers found switching their pension provider easy, compared to 73% when it comes to home or contents insurance and 69% for energy providers. Difficulty transferring drives lower engagement with
consumers, as more than a third of respondents (35%) report never having tried to change pension providers. This is compared to only 10% when it comes to both home or contents insurance, and energy providers.
Although pensions can be transferred electronically using a system called Origo Options, many providers still use paper-based transfer processes. The average switching time for electronic pension transfers is 12.5 days, in comparison to 34.4
days for paper-based transfer providers.
A 34.4 day average transfer time for paper-based providers is higher than the average transfer times of other essential services. Regulation requires that mobile phone contract switches must be completed in one day and bank account transfers equire a saver’s current account and direct debits to be fully transferred within seven days of the request. While OFCOM rules and the Current Account Switch Guarantee have removed barriers to switching in these industries, outdated
pensions legislation from 1993 currently permits pension providers to take up to six months to transfer a pension.
Only about 1 in 5 respondents (21%) feel very satisfied with the service from their pension provider, compared to 36% for current account and mobile phone providers, two essential services which guarantee switching in a week or less.
Here are some startling numbers
|Provider||Transfer Times (days)|
|National Employment Savings Trust (NEST)||17.2|
|Hornbuckle (Embark Group)||13.0|
|Legal & General||9.8|
Sources: Origo Transfer Index 1 July 2020 – 30 June 2021. All data is from Origo unless a provider does not use Origo or has chosen not to disclose its transfer times in the Origo transfer index. In those instances, PensionBee data has been used for the following providers marked with * and sample sizes are indicated in brackets: Capita (>100), Mercer (>100), MoneyBox (>100), Now Pensions (>1,000), Scottish Widows (>1,000), Smart Pension (>1,000), Towers Watson (>100), True Potential (>100)
Average transfer times
|Pension transfer type||Average transfer time|
Source: Origo Transfer Index 1 July 2020 – 30 June 2021 and 554 paper-based pension transfers to PensionBee from Mercer, Capita, and Towers Watson.
Average switch time by industry
|Pensions (paper-based transfers)||Pensions (electronic transfers)||Energy||Current bank account||Mobile phone||Home insurance|
|34.4 days||12.5 days||17 days||7 days||1 day||–|
Source: Origo, PensionBee. Insurance is purchased annually and will auto-renew or expire, so switching times are not comparable.
Levels of Satisfaction
|What score would you give based on your overall satisfaction/dissatisfaction with customer service?||Current (bank) account provider||Home/ contents insurance provider||Mobile phone provider (contract not handset)||Energy provider (gas or electricity)||Pension provider (workplace or personal)|
|Neither satisfied nor dissatisfied||13%||22%||15%||24%||30%|
Source: PensionBee, September 2021. Total respondents: 248. Numbers have been rounded.
Ease of switching
|How would you rate the effort required to switch to another provider?||Current account provider||Home/ contents insurance provider||Mobile phone provider (contract not handset)||Energy provider (gas or electricity)||Pension provider (workplace or personal)|
|Neither easy nor difficult||14%||14%||14%||14%||20%|
|I don’t know/I’ve never tried to switch||21%||10%||15%||10%||35%|
Source: PensionBee, September 2021. Total respondents: 249. Numbers have been rounded.
Perhaps it’s time to get the NAO back!