Financial Services Compensation Scheme  

FSCS disclosure sees people save more

FSCS disclosure sees people save more

About a third of consumers will invest more in their pension if they are aware it is protected by the Financial Services Compensation Scheme, research has found.

The research, undertaken by Populus, found of those with a pension, 29 per cent would invest a further £1,493 each year on average if they knew that their pension fund was fully protected by FSCS.

Of those who said they would not invest more, the most common reason was that they did not have any spare money to put into their pension fund.

Article continues after advert

The reason behind this trend was found to be predominantly that consumers would feel "more reassured" by a pension provider that prominently communicates the fact that its products are FSCS protected.

Mark Neale, chief executive of the FSCS, said: "We have seen with our work in the deposit sector just how important FSCS protection is in reassuring consumers and increasing their trust in financial institutions.

"This research suggests that more prominent promotion of FSCS can have a similar impact in benefiting both consumers and providers in the pension sector."

Consumers were also asked about the best ways their pension provider could promote the FSCS protection.

The majority thought the information should be promoted on their annual statement, while about a third would like it to be communicated via their employer/employer’s HR department.

Mr Neale said the FSCS had launched a group representing firms in the advisory and wider life and pensions sectors in March, which was working together to look at developing an industry best practice standard for disclosure.

The group will seek to offer a benchmark on how life and pension product providers convey information about FSCS to consumers.

Mr Neale said: "Today’s research makes clear the benefits that doing this will have for everyone, and we look forward to continuing to work with the group to ensure these gains can be realised."

Venilia Batista Amorim is a freelance writer for FTAdviser