PensionsMay 4 2017

FCA defers review into pension governance committees

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FCA defers review into pension governance committees

The Financial Conduct Authority has deferred its review into the independent governance committees of workplace personal pension schemes.

The review was initially launched last year to find out whether the committees are working properly, amid their recent rise to prominence in pressuring providers to cut pension charges.

But the FCA said work it had carried out with the Department for Work and Pensions found the committees had been broadly effective at implementing the recommendations of a previous review.

In a statement today (4 May) the FCA said: “Given this position we have decided to defer the full IGC review for the present to allow us to focus on other priorities.”

In 2013 the Office of Fair Trading carried out a market study of workplace pension schemes which found competition problems including a very weak buyer side and the potential for conflicts of interest.

Because of the introduction of automatic enrolment from 2012, the FCA decided it was even more important to ensure workplace pension schemes delivered value for money, so it introduced rules in 2015 requiring the establishment of IGCs.

In its 2016/17 business plan the FCA said it would review the effectiveness of IGCs but in December it published a report with the DWP which reviewed the committee’s against the recommendations of the Independent Project Board.

The FCA said: “It was broadly supportive of the effectiveness of IGCs in implementing the Independent Project Board’s recommendations.”

Steven Cameron, pensions director at Aegon UK, said the FCA was right to prioritise other activities.

He said: “IGCs have now been in place for two years and their second round of annual reporting provides evidence of ongoing challenge in the drive to ensure workplace members are receiving value for money.

“It’s reassuring that the FCA and DWP’s review of implementing the Independent Project Board’s recommendations on workplace pensions indicated effectiveness of IGCs.

“Each IGC’s focus will rightly continue to evolve, reflecting progress already made by their provider, new challenges and future regulatory developments such as the FCA’s standardised approach to disclosing transaction costs.”

damian.fantato@ft.com