Jeannie Drake on ensuring public good and consumer protection drives government plans on pensions guidance
Driven by the principles of public good and consumer interest, Labour peers have argued that the introduction of a public service pensions dashboard should be a requirement set out in the Pension Schemes bill. In response, ministers have submitted an amendment that requires the Money and Pensions Service (MAPS) to provide a pensions dashboard service.
The service will find and display all the information regarding an individual’s occupational and personal schemes, and their state pension – and all in one place. It will be part of MAPS function to deliver a pension guidance service to the public, free at the point of use and a safe space unfettered by any commercial interests. The public dashboard will operate alongside commercial ones, which may be authorised by the FCA if meeting the requisite regulatory standards.
The Bill gives the government the power to mandate all pension providers and schemes to release their data on an individual’s savings, where requested by that individual, using an authorised dashboard service. When fully built, it could find and display the personal financial data of around 25 million people.
This gives rise to major considerations of public good and consumer interest which is why we have argued strongly for citizens to have the right to access their data through a public dashboard rather than rely on a commercial service. It is also why we are pursuing two further amendments.
First, we want to ensure that the MAPS service is up and running for a year before commercial versions enter the market; and that the Secretary of State has reported to Parliament on the public dashboard’s operation and effectiveness.
Technology, including fintech, should be harnessed for the public good, empowering and informing citizens and improving the functioning of markets. The dashboard has that potential by reuniting the consumer with all their savings pots, including smaller ones that they may have lost track of; and assisting them in making better financial plans and decisions.
The architecture of building a dashboard service has its complexities and challenges, including liabilities, consumer behaviour and redress, data standards, verification and security, delegated access. None of this is a reason to stop progress but Parliament needs to be confident that the public and consumer interest is being well served.
The long-term savings market is particularly vulnerable because of asymmetry of knowledge and understanding between the consumer and the provider, the complexity of products, and the irreversible nature of many pension decisions. A plethora of reports and cases from regulators – the FCA, the CMA, TPR and the OFT – confirm this.
These concerns are informing the second amendment we will pursue, to ensure the dashboard does not move beyond the find and display function into allowing for financial transactions until Parliament is confident of the consumer protections being provided.
The dashboard should inform and engage people, but commercial versions which allow for transactions could lead to mis-selling and provider nudging. Indeed, for some vulnerable consumers, having a transaction function alongside information on all of their savings could result in poor and costly decision-making. Some could even be scammed out of everything.
There are those, of course, who argue that the complexities and risks are over considered but such opinions are less likely to be driven by the need for the dashboard to be first and foremost a public good. NEST, the Pensions and Lifetime Savings Association and Which? all want the government to focus on getting a public dashboard service in place – and with the strongest possible consumer protections. That is what Labour will press for in the Lords today and why ministers must listen and act.
Baroness Jeannie Drake is a Labour Peer
Published 30th June 2020