FCA open to trialling auto-appointments for Pension Wise

FCA open to trialling auto-appointments for Pension Wise

The Financial Conduct Authority is open to trialling automatic bookings of Pension Wise appointments as take up of the guidance remains low. 

Speaking at the Work and Pensions Committee yesterday (September 22), Sarah Pritchard, executive director of markets at the FCA, said the regulator would be open to considering possibilities of a trial, although it would need to do so in conjunction with other bodies.

The committee had asked for automatic appointments to Pension Wise to be included in the Pensions Schemes bill in 2020 but this was rejected by the government. 

The FCA is currently consulting on rules to get more people to seek guidance and has proposed to get providers to book Pension Wise appointments for their clients looking to access defined contribution pensions

Pritchard said: “We are open to all other options [but] we do need to discuss with other partners whether an auto appointment trial would be sensible or not.

She said the FCA is aiming to publish its policy statement on this before the end of the financial year. 

In its consultation the regulator said its proposals would encourage savers to take the right guidance at the right time to help them make informed decisions.

Currently, providers are required to signpost consumers to Pension Wise and encourage them to seek appropriate pension guidance or advice to help them understand their option but take up of Pension Wise guidance remains low.

Pritchard said it would be useful to see how a stronger nudge, as proposed by the FCA, delivers and whether or not it has significantly increased the take up rates for Pension Wise before trialling anything else. 

“The previous behavioural testing did show a significant increase albeit still at very low rates, and we're hoping that [to go up] through the stronger nudge, which effectively asks pension providers to signal Pension Wise to consumers to offer appointments, and then to record what the consumer did in response to that engagement.”

She added: “We're hoping that will drive levels up, but we need to see how that works in practice and we would clearly need to work in conjunction with others if we were to go down the route of supporting a trial scheme.

“That is something that we're open to considering as part of the discussion and considerations that we have, now that our stronger nudge consultation has closed.”

Pritchard also explained there is a concern that mandating Pension Wise might cause consumers to disengage because it may be seen to stand between them and their ability to access their pension. 

“One alternative we've suggested is a cooling off period so that discounting a Pension Wise appointment is not the quickest way of accessing your pension savings and that is another alternative that is in the mix too,” she said. 

“We have said that alone, I don't think that the stronger nudge itself is sufficient to drive take up rates so that it becomes the norm, but we do want to see how stronger nudge, potentially cooling off periods or any other responses that we've had into our consultation, [can] develop.”