Although not originating from the Financial Advice Market Review, the commitment to delivering a pension dashboard was one of its most valuable recommendations. Successful implementation could make key information on savings far more accessible to consumers and provide a foundation for delivering better advice and guidance.
Sadly, however, it looks like the actual pension dashboard project will deliver a solution that will be obsolete before it arrives, constrain completion and damage the UK financial technology sector.
Last month at the Association of British Insurers, Open Identity Exchange presented its Pensions Finder Alpha white paper proposing how the project should be taken forward. OIX has done good work in other sectors but on this project it seems to have failed to properly understand the market environment and the technology that already exists to support the desired objective.
The proposal is to deliver a single solution dashboard that can be white labeled through “approved industry websites”. The pretext for making this a single solution is a piece of consumer research that included just 24 people. This strikes me as flimsy evidence.
Providing a pension dashboard is essentially a data aggregation project. It will pull together information from consumers’ various existing pension arrangements and present them in a single interface. This sort of data aggregation – generally known as personal financial management – has become a huge industry worldwide, yet the white paper makes no mention of this.
Around 50 per cent of adviser firms that have client management systems today already have the necessary software to deliver a pension dashboard to clients embedded within those systems. Both Intelliflo and True Potential provide their users with this capability and Sammedia offers firms a stand-alone service. Aon and Mercer have also invested heavily to be able to provide such services to their clients’ employees. MoneySupermarket, LoveMoney, Money Desktop and Yodlee all offer direct-to-consumer personal financial management capability too.
The OIX report makes no reference to such capabilities, which could be used today to provide exactly the sort of services its project aims to deliver, rather than having to wait years for it to arrive. Convenient is you want a mandate to build a single solution.
A competitive market is evolving in the UK to increase the availability of financial information services to consumers. Non-UK suppliers are currently looking at bringing their solutions to our market. One thing that will discourage such inward investment will be if it is seen there is a government-sponsored project that would directly compete with them. This will not help the UK financial technology sector.
The proposal as it stands will focus attention and resource in the wrong area. Pension providers currently accepting new business are, almost without exception, capable of delivering the information needed today. Any that are not will find no shortage of technology companies willing to enable them to do so.
I am not known as an Origo evangelist but much of what the standards body designed 10 years ago could and should be reused to accelerate the delivery of open standards to support the pension dashboard.
Where focus – and indeed pressure – is needed is on the closed book defined contribution providers and defined benefit trustees to support the project. For various reasons these communities do not like giving information to their customers. Denying information to customers is at the heart of the operating model for the majority of closed book DC providers. In the DB market far too many pension schemes simply do not have any technology. All too often their records amount to card files.
For the pension dashboard to deliver the best consumer outcomes it must, wherever possible, take advantage of the technology that already exists. It should make full use of open data standards delivered by Origo and others, and focus on facilitating a federated model that will encourage further market innovation and foster competition.
While a federated model was explored in the presentations at the ABI, it was conveniently dismissed and does not form any part of the recommendations in the document. It is not too late to change the focus and direction of the pension dashboard so it can deliver the best consumer outcomes. Advice firms and their technology suppliers (who so far have, interestingly, been excluded from the project) need to stand up and demonstrate how existing capabilities can deliver a better solution faster and at lower cost.
Ian McKenna is director of the Finance & Technology Research Centre