TISA urges FCA to consumer-test proposed transfer changes and ensure consistency for consumers
TISA has today urged the FCA to work with DWP to ensure its proposed changes to pension transfer rules are consistent across regulatory regimes and properly tested with consumers before final rules are considered.
TISA is also calling for assumptions consistency so members have a coherent experience in the retirement projections they receive from pension dashboards, annual statements and online modellers.
Renny Biggins, Head of Policy: Products & Long-Term Savings at TISA, said:
“While we support the aim of these proposals to improve consumer outcomes, any change that risks adding material delay to transfers must be backed by robust consumer testing to ensure any benefits derived are proportionate to the significant time and operational burden involved.
Changes must also be mirrored by DWP and implemented across the board simultaneously to avoid members receiving inconsistent outcomes and disjointed journeys between regulatory regimes. This is a prime example of the issues that exist having two regulatory regimes spanning across DC workplace pensions.”
TISA’s key recommendations for the FCA:
- Consumer-test transfer changes to demonstrate that the implementation effort and projected two weeks of delay for consumers due to these proposals would be merited.
- Mirror the transfer proposals in DC occupational scheme legislation and implement them simultaneously to avoid inconsistent transfer journeys for consumers.
- Base simulation decumulation scenarios and assumed growth rates on standard SMPI assumptions to create consistency and avoid consumer confusion and disengagement.
Renny Biggins added:
“We also have concerns that the proposals for online modelling simulations go beyond their intended purpose by providing a personalised decumulation solution which could be perceived as a personal recommendation by those close to retirement and discourage consumers from using them to scenario plan.
More generally, we already have assumption requirements for SMPI which members receive annually and will also be used for pension dashboard when providing an estimated retirement income. We strongly recommend the assumptions for both decumulation and growth are aligned to these requirements so members are not receiving wildly different figures, which would only serve to confuse, create disengagement and add to distrust in the framework.”
Notes to Editors:
- TISA’s full submission to the consultation is available on request
- The FCA’s consultation CP25/39: Adapting our requirements for a changing pensions market can be accessed here.
- TISA is a not-for-profit membership organisation committed to improving the financial wellbeing of all UK consumers by working collectively with the financial services industry to deliver solutions and champion innovation, for the benefit of people, our industry, and the nation.
TISA has approximately 270 member firms involved in the supply and distribution of savings and investment products and associated services. Members include the UK’s major investment managers, retail banks, online platforms, insurance companies, pension providers, distributors, building societies, wealth managers, third party administrators, FinTechs, financial consultants, financial advisers, industry infrastructure providers and stockbrokers