Various pension industry stakeholders have called for action in response to the HM Treasury consultation on pensions transfers and early exit charges.
Aegon’s regulator strategy manager Kate Smith said it is time to expand digital transfer processes so that all providers and non-insured schemes invest in a standardised system.
“Common industry standards and processes will drive efficiencies, alongside a pension dashboard, where customers will be able to see all their pensions in one place.”
She also pointed out that the pension freedoms increased the risk of fraud for all customers, not just those reaching age 55, so to combat this, the government, regulators and industry must establish a ‘transfer club’ where providers and non-insured schemes are vetted and agree to specified standards and processes set out in regulatory guidance.
“As well as mitigating the risk of pension fraud, a transfer club operating across the entire pension industry would make transfers simpler and safer for customers,” added Ms Smith.
In terms of the widespread confusion about how to apply the £30,000 advice requirement, particularly when valuing safeguarded benefits, she argued that the industry needs urgent clarity from the government and regulator.
“We welcome the Pensions Minister’s recent announcement to consult on the advice requirement to end the confusion. We want to avoid prescriptive legislation and the associated complications that would bring.”
Paul Pettitt, managing director of e-commerce and standards body Origo, commented that the Treasury should remain cognisant that speed of transfer has to be balanced with consumer protection, effective procedure, appropriate risk mitigation and overhead cost.
“This is particularly pertinent given the increase in pension scamming and pension liberation attempts,” he added.
“We believe Treasury can leverage the established collective effort of all involved in [industry pension transfer project] Options to maximise consumer benefit, with minimum disruption and cost to the industry.”
Ben Cocks, founding director of Altus Business Systems, told FTAdviser that unless customers can easily transfer their pensions from one provider to another then competition between providers will be stifled and the new pension freedoms will not have the intended liberating effect.
“A few years ago the Stocks and Shares Isa world was suffering from the same problem - providers were restricting transfers out and competition was suffering - in that case it took regulation in the form of RDR to open the flood gates. Sadly it looks like a regulatory prompt is also needed for pension transfers.”
Earlier this week, Citizens Advice called for pension exit charges to be capped at £50 and only permitted where providers face genuine administrative costs of exit or transfer.
More than two million consumers could face an exit charge of over £50, including almost 40,000 who could be hit with a charge of more than £5,000, according to analysis by the organisation.
In its response to the consultation, the charity also argued for a maximum pension transfer time limit to be introduced - suggesting 15 days - following the time limit model introduced in other areas of financial services, such as for switching current accounts or Isa transfers.