This is why the FCA’s COBS rulebook is so long

This is a blog about rules and how you cannot regulate for everything. It’s about writing rules against imaginary risks rather than working on the basis of trust. It’s about gaining the co-operation of large dashboard data providers to meet voluntary guidelines on connection to the pensions dashboard prior to the potential go live date two and a half years from now. It is a nonsense.

This nonsense has its genesis in the FCA’s daily update on its activities, I’d read on Monday in the FCA updates

Modification by consent: COBS TP 2.38BR

I thought OMG – this is another concession to “Pension Providers – the Unready”

So had the FT’s Jo Cumbo

and I wonder how many other people thought

You can’t be 80% right without being 20% wrong

The Government’s excuse for pushing back the dashboard available point from 2019 to October 2026 has been that it is better to ensure completeness than risk the dashboard’s credibility by delivering a partial solution. This seemed to point to the worst of both worlds, a partial solution delivered 7 years late. It wasn’t. but that didn’t stop me getting confused, as I’m sure were many of the those who try to make sense of what we read on rule changes.

Below , is a slow motion replay of how I reacted to reading the changes to the COBS rulebook-  “modification by consent”. It started with alarm that large schemes were being given further easements to connect to dashboards

This modification enables firms to connect to the MaPS (Money and Pensions Service) pensions dashboards digital architecture before 31 October 2026, in line with the ‘connect by’ dates in the Department for Work and Pensions connection guidance (Pensions dashboards: guidance on connection: the staged timetable), even where they are unable to connect, and comply with COBS 19.11, for 100% of their relevant pension scheme members’ data.

and incredulity that this should be considered “problematic”

The unmodified rules under COBS TP 2.38R & COBS TP 2.38BR state that if a firm completes connection to the MaPS pensions dashboards digital architecture before 31 October 2026, that firm must comply with all the obligations under COBS 19.11. This may be problematic for firms that are able to connect by the ‘connect by’ dates in the Department for Work and Pensions connection guidance but are unable to comply with COBS 19.11 for 100% of their relevant pension scheme members.

The relevant dates in the Department for Work and Pensions connection guidance are 30 April 2025 for firms with 5,000 or more relevant members and 31 January 2026 for firms with fewer than 5,000 relevant members.

My outraged reaction…

There is no need to justify failure to have data ready, simply a consent to be let off the hook for failing to do what schemes have been told to do for more than 7 years – get their data ready.

When Guy Opperman, Laura Trott and latterly Paul Maynard spoke of failure to comply, they were explicit in stating there would be no hiding place for the unprepared.

my headline…

The biggest loophole since Cern?

The Department for Work and Pensions published guidance on 25 March 2024, setting out a staged timetable for connection to the MaPS digital architecture with connection deadlines depending on the size of the scheme. FCA-regulated operators of relevant personal and stakeholder pension schemes must have regard to the guidance when preparing to connect to the MaPS dashboards digital architecture and to comply with the requirements of COBS 19.11 in the FCA’s Handbook.

Connecting to the MaPS pensions dashboards digital architecture in line with the ‘connect by’ dates in the guidance will facilitate the Pensions Dashboards Programme to carry out critical user testing at scale and pace. We acknowledge the unmodified rules may deter firms from connecting by the DWP guidance ‘connect by’ dates of April 2025 and January 2026 where they are unable to comply with COBS 19.11 for 100% of their relevant pension scheme members.

Through this modification, a firm can ensure compliance with COBS 19.11 where they connect before 31st October 2026 (in line with the ‘connect by’ dates) but are unable to comply with COBS 19.11, for 100% of its relevant pension scheme members’ data.

And then for the punchline

The Direction includes guidance that, if a firm connects before 31 October 2026 in reliance on this modification, we would generally expect the firm to be in a position to comply with all of the provisions in COBS 19.11 from the date of connection in respect of at least 80% of its relevant pension scheme members.

And that is why the market message became

NEW: Pension providers can connect to new “pension dashboards” with a minimum of 80% of customer data, under new ‘flexible’ changes adopted by regulator.https://t.co/7eJUNA7GhB

— Josephine Cumbo (@JosephineCumbo) April 30, 2024

Which is where the story gets really strange

Because clicking through explains that this is not about letting schemes off being dashboard ready

The purpose of TP 2.38B is to ensure that firms are able to connect to the MaPS dashboards digital architecture before 31 October 2026, and that where they do they are COBS 19.11 compliant

What this is , is a new rule that encourages schemes with up to 20% dirty data to connect to the dashboard without fear of being called out. You have to be pretty dirty to be more than 20% wrong when it comes to your record keeping!

You cannot regulate for everything – but COBS tries

I can now understand why the FCA gave this easement. It was to stop schemes from complaining that they had been rushed into 100% compliance too early. It’s the  FCA giving them a few months grace to clean their act up, when they’ve already had a few years.

But that only becomes clear from reading the detailed regulations. Meantime, the message to the market is that dirty data is still acceptable. Frankly it’s a ridiculous concession bearing in mind the run-up large schemes have had and it’s another page in the COBS rulebook that nobody really needed – but the lawyers.

Whatever happened to principle based regulation?