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Ian McKenna: The pensions dashboard is heading for disaster

A single service only accessible by consumers via the new guidance body would spell the end for the project

Judging by its response to my last column on the subject of pensions dashboards, in which I called for it to be removed from the project, I seem to have got the attention of the Association of British Insurers.

But let’s put to one side my thoughts on who should lead the project and focus on the impact of recent events instead.

If the dashboard project proceeds along the lines outlined by the report “Reconnecting people with their pensions” published on the ABI website in October, it will have catastrophic consequences. This will not just damage advisers but also the life and pension providers and platforms that rely on advisers as their primary form of distribution.

Pensions dashboards should deliver consumers an unparalleled level of information about their retirement savings. This is a really important objective and one which should encourage millions to pay more attention to their prospects for an income in retirement.

Having provided consumers with such information, the natural question for many will be: what do I do next? The obvious answer is to take advice.

The current minimum viable product, as defined by the above report, is for a service that will not include adviser access to information offered to their clients by life offices and platforms delivering pension dashboards.

Having discussed this approach with a number of sales professionals within ABI member firms, they are dreading the prospect of having to explain to advisers that their organisations have built an exceptional new service for their clients but that it can only be accessed by the client.

Surely this will arouse many advisers’ worst suspicions as to the motives of a pension provider in delivering such a service. If I was asked to come up with a mechanism to undermine the adviser community in a digital world, I would struggle to come up with a better plan than the proposed minimum viable product recommended in this report.

Given the pension dashboard was an output of the Financial Advice Market Review, does it really make sense to deliver a service that cannot be accessed by advisers?

Call me a cynic but I strongly suspect a project that not did not include access by pension providers as part of the minimum viable product would never have got sign off by the ABI’s project group.

But ironically – and disturbingly – it is now looking like this may well be exactly what we end up with.

Although it is yet to publish any formal proposals, the view in informed circles is that the Department of Work and Pensions’ preference is for a dashboard built as a single service that would only be accessible by consumers via the forthcoming single guidance body.

This is an approach that was thoroughly discredited during the Treasury phase of the project and that would almost certainly ensure pension dashboards will never be delivered. Anything that is delivered will be worthless, costing consumers vast amounts of money for zero benefit.

The Treasury was adamant throughout its management of the project that the one thing it wanted to avoid was a large government IT project, as, by their own admission, this is something government departments do incredibly badly.

The pretext for this is that the consumer research during the last ABI-run phase of the project found a single dashboard would be the preferred option.

This was based on a forum session attended by Age UK, Which?, Money Advice Service, Citizens Advice, Trades Union Congress, The Pension Advisory Service and PensionWise – i.e. dominated by organisations which either have a negative perception of the private sector or which offer free alternatives to advice.

Hardly an impartial audience. In addition, the independent consumer research was co-funded by the Money Advice Service, so no surprise it delivered a message supportive of the single guidance body.

One issue that would need to be addressed in such a plan would be who would pay for the dashboard. Again during the Treasury phase, it was made clear the industry would be expected to pay for it. You can hardly ask an industry to pay for something they do not have access to.

If the DWP really wants to pour tens of millions of pounds of taxpayers’ money into a monolithic government IT project, go ahead. But this will be a very poor outcome for consumers.

The DWP is holding a series of meetings on 11 December to consult with interested parties. This is perhaps the last opportunity to save what should be a flagship project.

The industry should be calling for the project to revert to the Treasury plan that will provide consumers with the greatest choice. A choice of who they wish to get assistance from: the new centralised guidance body, pension providers or advisers. That would be a whole lot easier if ABI members were to give a similar commitment to supporting advisers.

Ian McKenna is director of the Finance & Technology Research Centre

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. A question for Ian.

    Surely if a client wants advice then they would log into the dashboard whilst with their adviser (or give them their log in details)?

    If a client doesn’t want advice, it wouldn’t matter to them if the dashboard was available to advisers anyway.

  2. @David Tasker In my experience advisers will want to prepare for meetings in advance rather than wait until the client visits, indeed it would frequently be a paraplanner or administrator preparing the client file in advance of a meeting. One of the primary objectives of Pension Dashboards was to reduce the cost of financial advice. Making accurate information easily accessible to an adviser to a consistent common standard would have been a significant benefit but if advisers cannot get advanced access the information directly that opportunity will be lost.

    Open Banking has already defined a consent driven process that could be adopted by Pension Dashboards.

    Suggesting a consumer provides an adviser with their personal login details would be to encourage poor security practice.

    You could argue it would be both unethical and unprofessional for an adviser to do so, indeed they could be accused of impersonating the client and possibly even leave themselves open to accusations of a breach of the Computer Misuse Act. Not a good way to go I would suggest.

    • Ian, I wasn’t suggesting that the industry should encourage password sharing but we all know what happens in practice. My point is that you present an apocalyptic outcome for the PD if it isn’t opened up to advisers on day one. Of course that’s the desired outcome but it is to be hoped that it still gets built. At some point, hopefully in the very near future adviser access will be facilitated. What I wouldn’t want to happen would be for the advice community to turn its collective back just because it didn’t get its way on day one. The PD is coming. We all knew it would never be perfect on day one. What about all those zombie life offices who probably won’t play until legislative intervention? That’s a far bigger concern.

      • David – in terms of relevance and usefulness Ian is right in his description of the abject failure. (Money advice service anyone?). Surely no one connected to pensions in any way would deny that there is no better beta testing or provider-pressuring than putting the access into the adviser arena.

        The adviser has to take all relevant info into account.

        “Mr Client, I need the relevant info from your five pensions, and your state benefits.”
        “Mr. Adviser, I registered on the dashboard last year, you can get it from there.”
        “Mr. Client, no, I’m not allowed to see your aggregated pension data, it’s not for me.”
        “Mr. Adviser, if you’re not allowed to see it, why did you ask me for my pension information?? Aha, Mr Adviser, you tried to catch me out. I only asked you for pension advice, I didn’t know you’re not allowed to see the info, that’s probably because it’s personal to me.”
        “Mr. Client, err, I’m not allowed to see it aggregated, and, err, I’m not allowed to advise you without that information. Tell you what, why don’t you print off, fill in, sign and return to me these five letters of authority, and I’ll collect the information myself. Because I’m not a commission hungry beastie, my hourly rate is reasonable so I’ll only have to bill you around £300 + VAT for the time”.
        “Mr Adviser, I don’t want to pay that, instead of having you ‘see’ my pension on the five providers websites why don’t I sign for you a letter of authority for the dashboard? After all, its only my pensions info, and you are advising me on my pensions”.
        “Mr Client, not allowed. Computer says no”.

        Two months later…

        “Mr Adviser, that was a painful process, and no added value holding this infor separately from you. Tell you waht, why can’t I just roll all the pensions into one – simpler for me, simplere for you and you won’t have to go to five places for updated info.”

        “Mr. Client, sign here please….”

        Whatever separate pensions Mifid2 fails to have consolidated, a restricted PD will finish off.

      • No David I am presenting an apocalyptic outcome for the PD if it ends up as a single service with access only by consumers direct and te new Single Guidance body. That said if Adviser Access is not part of the MVP it will just become a can that gets kicked down the road and that element will never delivered on.

        I am fascinated to hear what the DWP have to say on Monday but unless they turn up with a vastly different message to the briefings I understand they have been giving for some weeks I think the Pension Dashboard is dead, we just have not had the funeral yet, I expect that to be Monday.

        Too many vested interests in the poorly administered, unaccountable and underegulated Trust based DC and DB sector have been able to to kill off what would have been a great innovation for consumers because they would have had to adopt some level of transparency and delivered to professional standards. I expect they can rely upon their friends at the DWP to put just enough barriers in the way to make sure consumers never get the information they deserve.

    • It starts to get more interesting: from the ABI report –

      “The aim of pensions dashboards is to help consumers answer the questions, “Where are my
      pensions and what are they worth?”

      One of the consumers interviewed for this research was Mandy, aged 50:

      “…When trying to find information on my pensions, I did not find it easy at all – it was way too much hard work so in the end I just gave up. I think these things are set up to make it difficult so that we don’t want to do it. I don’t understand a lot to do with pensions and it brought home to me just how difficult it is to find things out and ask questions. Pensions are a minefield and unless you’re on top of it, which I’m not, then I think things can get lost and mislaid. Who keeps paperwork from 20 years ago? I certainly don’t. So, I think it’s really difficult”.

      Done well, dashboards will make it easy for people like Mandy to find their pensions, they will increase transparency, and help people plan for their futures. Dashboards have the potential
      to revolutionise pension saving and bring pensions into the 21st Century.”

      a) by definition, the target market is those without a competent pension adviser.
      b) Mandy said ‘I don’t understand a lot…pensions are a minefield’.

      Just how that consumer problem was seen to need a dashboard as the answer makes wonder what the researcher was smoking at the time. One might suggest putting her question and the researcher’s answer to a compliance person.

      She doesn’t need a dashboard, she needs advice. She’s already told us she doesn’t understand. What’s the dashboard solution, shout louder until she does?

      This is not rocket science.

  3. A very interesting time with the DWP at the ABI this morning. Just a quick update, I will write in more detail soon.

    Overall I think it is all to play for. If the DWP were thinking (as was quite widely briefed in recent weeks) of a single dashboard solution at the least that issue is still undecided.

    The Minister did repeatedly make reference to Dashboard (singular) as opposed to Dashboards (plural) which was the accepted approach when the Treasury were leading, but that may just be a matter of getting up to speed with the lingo.

    Single or Multiple dashboards was one of the most hotly debated subjects and the more advisers I speak to the more firms I come across who feel strongly that adviser access must be in the Day One solution.

    If advisers want such access there is an urgent need fir firms to speak out about why it is important and why it is in the CONSUMERS interests and will be a critical factor in maximising consumer engagement.

    DWP are running a feasibility study which will report in March. Now is the time for advisers to make their voices heard on this.

  4. The PD offers the opportunity to reduce the cost of advice and make advice more accessible to more consumers. Without adviser access it will fail to do this.
    Providers and advisers have a common interest in streamlining access to information. Without adviser access the costs savings for providers and trustees will not materialise and consumers will be left footing the bill for advisers to access their information on a bespoke basis.
    If DWP were to grant access only with permission of the client and only to regulated advisers it would go a long way towards helping the public identify scammers who would be prohibited from direct access to the PD.
    With adviser access, this is a win win for all concerned but without it barriers to access to advice will remain.
    If advisers are not given access they should not share the cost.

  5. The full transcript for those who like to read this stuff is here
    https://www.gov.uk/government/speeches/pensions-dashboard-development-day

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