The Financial Conduct Authority (FCA) has told MPs it wants a regulatory 'backstop' so it can force businesses to comply with the pensions dashboard project.
Speaking before the work and pensions select committee, a panel of senior FCA representatives, including chief executive Andrew Bailey and executive director of strategy and competition Chris Woolard, explained that if the industry fails to provide what is required of them to the pensions dashboard, the regulator will intervene.
When asked what the FCA will do if the industry does not participate in the development of templates for the pensions dashboards on a ‘voluntary basis’, Bailey said: ‘If they don’t, then we will have to step in, no question about that.’
He explained the regulator’s intention to ‘stay very close’ to monitoring the industry’s intentions on this. ‘You can take our word for it that we expect this to happen and we’ve said that right from the beginning coming out of the asset management market study... I think it’s a good test to the industry here, but if they don’t, if they fail, we’ll make them do it.’
New Model Adviser® revealed in November the pensions dashboard will require compulsion and would be funded by an industry levy.
The FCA plans to oversee the industry’s involvement with the pensions dashboard via its supervisory work, as well as its general overview of the industry and communication from the Single Financial Guidance Body.
Adding to Bailey’s comments, Woolard said: ‘Obviously the Department for Work and Pensions [DWP] is consulting on how there will be additional powers and one of those is giving us, not to just cobble together what we can, but actually giving us a power around setting templates and those kind of questions.’
He said the FCA would welcome a ‘backstop’ granting the regulator with the ‘power to act’.
Bailey added: ‘We are starting off in a world where there is a voluntary encouragement now and the industry is part of that process, with the new group that has been set up, to put it into effect. So we would be delighted, frankly if that led the industry to take it up on an extensive voluntary basis.
‘All the incentives should be there and the responsible thing for the industry is just that.’
With the publication of the DWP’s pensions dashboards feasibility study at the end of last year, it was announced the Single Financial Guidance Body will take the reins on the development and governance of the initial platform.
Minister for pensions and financial inclusion, Guy Opperman, also confirmed the government will force schemes to provide data to the pensions dashboard, although a timeline is yet to be agreed on this.
Opperman said in parliament there is ‘no doubt compulsion is coming’ for the provision of information to the platform.
PensionBee chief executive Romi Savova said providers should be split into ‘groups’, starting with those who can supply data straight away in 2020 and staging the rest of the providers over a three-year period.
‘Providers should be able to voluntarily choose which group they belong to, bearing in mind their choice reflects their priority to maintaining clean customer data,’ said Savova.
‘Cleaning should not really be negotiable. Under general data protection regulation requirements, all providers have an obligation to maintain clean customer data.’