Pension experts are urging The Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) to create joint project teams with a single regulatory mind in some of the most important topics for the sector.
Specialists are, however, against a merger of the two institutions, since it could potentially create a “massive disruption” in the pensions market.
In response to the regulators’ paper on a joint regulatory approach, John Mortimer, secretary of the Society for Pension Professionals (SPP), argued that it would be helpful for “individuals – who cannot generally be expected to understand the specifics of pensions regulation – to have as far as possible a single source of information”.
He said: “We believe that consumer confidence in the pension system can only benefit from as great a sense as possible of a single ‘regulatory mind’.”
Mr Mortimer also argued that the watchdogs should work on a single definition of value for money.
He said: "It is extremely important that the FCA and The Pensions Regulator keep firmly in view that value for money is not just about the level of costs and charges and can only properly be assessed by reference to outcomes for members.
“Value for money also extends to the provision of advice, which is currently generally viewed as being too expensive. The FCA and The Pensions Regulator need to look at options to address this issue.”
Kate Smith, head of pensions of Aegon, agreed that the regulators should join forces in certain areas.
She said: “A pool of resources would be good, where you have The Pensions Regulator people that become more specialised in the FCA market, and vice-versa.
“Defined benefit (DB) transfers is an area where this is already happening. DB consolidators would also be a good area for this collaboration.”
The watchdogs are already working together in cases where it considers that savers are being targeted for pension transfers, sending a joint letter signposting these individuals to The Pensions Advisory Service (TPAS).
Ms Smith is, however, against a merger of the institutions.
She said: "Regulators should be separate. They have different objectives.
“If they did come together that would be a big, huge project which could take several years. It would be just another detractor to what needs to happen at the moment to make sure the market works effectively and consumers are protected.”
The Association of Consulting Actuaries (ACA) also shares this opinion.
In its submission to the consultation, the trade body stated: “We think that it is better for there to be close co-operation, than the alternative of potential massive disruption whilst a new sub-division is worked out, or The Pensions Regulator is subsumed within the FCA (in which pensions might be in danger of getting lost).”
According to Martin Bamford, chartered financial planner for Surrey-based Informed Choice, maintaining two separate regulators, with their separate regulatory focus, makes sense.
He said: "But all regulators with points of crossover should collaborate to ensure joined-up thinking. If The Pensions Regulator and FCA are ever working on areas of common interest, it makes real sense to work together so their policies are aligned and regulatory fees are not wasted through the duplication of work."
maria.espadinha@ft.com
