The Pensions Regulator chief executive Lesley Titcomb has warned that the regulatory implications of the pensions dashboard are a "minefield" that will have to be addressed.
Speaking at a demonstration of the dashboard prototype today (12 April), Ms Titcomb said regulatory or legislative arrangements were needed to guard against the danger that a dashboard would encourage imprudent behaviour and lead to scams.
"If you're going to change the law, you have to demonstrate you've considered the unforeseen results," she said.
"What if it encourages people to take their money out of their pensions and put it somewhere less safe or indeed be scammed?"
In particular she emphasised the danger that it could encourage more people to transfer out of defined benefit pensions, mentioning the issue twice during the discussion.
"We have to be a careful about unforeseen consequences. Is it a good thing for everyone to be transferring out of a DB pension into a DC?" she said.
"We have to think about the practicalities. You can't just roll a model out," she said.
Ms Titcomb, who was previously chief operating officer of the Financial Conduct Authority, said regulatory guidelines were also needed to protect vulnerable groups, such as the elderly, and that "parallel models" would need to be created for such customers.
She said all this would require legislation, something that would be even harder than usual to achieve as the government would be pre-occupied with negotiating Britain's departure from the European Union.
Overall, though, Ms Titcomb was positive about the dashboard, and said her concerns should not prevent industry from continuing to build dashboard technology.
She said the most important test of a successful dashboard was whether or not it did "something of use for consumers".
Her comments came ahead of an announcement that Treasury was seriously considering making participation compulsory, to ensure the information in the dashboard is comprehensive.
On the question of compulsion, Ms Titcomb said: "In the end you would want the dashboard to be fully comprehensive. But I would counsel against running too far too fast. You need to start small and grow."
She conceded that some trustees were worried about the dashboard, but said ultimately they preferred to be given clear messages from government and regulator.
She added that it had not yet been decided which financial regulator would oversee the dashboard.
Currently TPR and the FCA share responsibility for regulating pensions, with TPR looking after occupational trust-based schemes, and the FCA looking after personal and contract-based pensions.
Both types would be feeding into the dashboard.
The Association of British Insurers, which represents FCA-regulated insurance companies, has called for the FCA rather than TPR to be given responsibility for the dashboard.
The industry body, which oversaw the creation of the dashboard prototype, has also urged Treasury to make participation compulsory.
Steven Robinson, a financial planner and director of Clarke Robinson & Co, agreed that increased consumer engagement with pensions carried risks.
“If there’s a real danger that people start getting in touch with DC schemes and switching it all to cash, it needs to be flagged up on the dashboard,” he said.
“The dashboard is better than nothing, but it does need to come with some idiot’s guide of what to do and what not to do.”
He said he had often seen people do foolish things with their pensions, such as put the whole fund into cash or shares in a single company.
However, he said he did not consider a further surge of DB to DC transfers to be a major concern, because people transferring more than £30,000 already have to get professional advice.
james.fernyhough@ft.com
