Two weeks ago, I participated in a challenge session for the pensions dashboards project hosted by the Personal Finance Society. The objective of challenge sessions is to ensure the widest possible range of views are represented as the project is defined.
Over the last six months, the project has had to move forward without the level of engagement from HM Treasury it had previously benefited from, given other more pressing political matters. In that time, the Association of British Insurers has been progressing work behind the scenes to be ready for when Government resources are available.
The benefit of enabling challenge to the project was reinforced in this session, where we heard some interesting suggestions around changing current priorities.
For example, PFS past-president Edward Grant presented a strong case for focusing on delivering the dashboards to millennial consumers first, particularly those who have been auto-enrolled in recent years.
Grant cited the example of his own daughter who, at just 20 years old, has already been a member of three auto-enrolment schemes. So far, all communications on these schemes have been on paper and Grant explained it has been a challenge to persuade his daughter not to opt out.
One of the main challenges faced by the pensions dashboards project is the reluctance of certain constituencies (most notably some trust-based schemes, especially defined benefits schemes, and some closed book providers) to participate.
Grant’s suggestion was both simple and brilliant. The vast majority of auto-enrolment pensions have been provided by organisations already part of the dashboard prototype projects.
Young consumers are far more likely to embrace information delivered to them electronically. If we can demonstrate to the Government our ability to deliver a quick win to auto-enrolment customers, this should encourage them to prioritise the additional support needed to bring other organisations on-board.
Given the infrastructure that already exists, I would be disappointed to not have pensions dashboards live, with data from providers accounting for over 90 per cent of auto-enrolled individuals, by Q2 2018.
If we build on work already been done by the open banking project, we could avoid the need for much of the excessive governance structure currently being proposed.
I do not believe anyone is suggesting the security infrastructure for open banking is inadequate. So why do we need to invent a different process for pensions dashboards? Do we really need to reinvent the wheel, especially when a perfectly good one has just been fashioned? What we really need to do is move towards a process of open pensions or open savings, rather than invent a separate expensive quango for the dashboards.
Providing an initial service to auto-enrolment customers need not delay the objective of delivering full pensions dashboards in 2019. It would simply mean services being provided to a key constituency earlier than planned. Surely this can only be an attractive prospect?
The challenge session was not all good. In fact, another element of the discussion set off a whole load of alarm bells.
It appears there is now a view within certain quarters of the project that delegated access (where consumers can share their dashboard information with advisers, among others) may no longer be a priority for the initial version of the service.
This would obviously be attractive to the ABI, acting in the interests of its members, to find a way to cut advisers out of these new services. But it would be a disaster for advisers, their clients and the success of the pensions dashboards project.
We must remember that this is the same ABI that was the original architect of the RDR; the plan being to undermine the adviser community. That the actual impact has been a huge benefit to advisers does not change its original intent.
With this in mind, advisers should apply to the FCA for the new account information service provider regulatory permission as soon as possible, so they will be able to produce their own dashboards.
I would also urge advisers to lobby all the life offices they deal with to make clear to the ABI that any dashboard project without the ability for advisers to access data from day one is unacceptable.
PFS chief executive Keith Richards’ view is clear: “Delegated access must be a primary requirement for the initial pensions dashboards service to protect consumers’ interests. We need to make sure that, having given people consolidated information, they can easily get the guidance and advice they need to act upon it.
“While some consumers may wish to use the services without advice, experience tells us large numbers will seek professional help or be signposted to do so. Delegated access must therefore be part of the minimum viable service requirements”.
It is important advisers have every opportunity to input to the requirements for the pensions dashboards. As such, I will be running further sessions on the topic at forthcoming PFS regional events. Members should look out for details and I will feature highlights here in the future.
Ian McKenna is director of the Finance & Technology Research Centre