The majority (80 per cent) of master trusts believe that financial advice and guidance regulations currently in place in the UK impede good service delivery, according to a new report.
The Pensions Management Institute (PMI) stated in its PMI Master Trust Report, out today (December 5), half (53 per cent) of the master trusts surveyed found rules around advice and guidance impeded the delivery of services to members, which would otherwise provide better outcomes.
The report included a survey of 15 workplace pension providers.
It found rules around pension providers having to signpost their members to PensionWise in their retirement packs, and mandatory advice on defined benefit (DB) transfers worth more than £30,000, were a particular hinderance.
The professional body said some of the respondents had given "strong feelings that members were not getting a good service because of regulations put in place to protect them".
The research also focused on the current master trust authorisation process, which will give providers until the end of March 2019 to apply for authorisation with The Pensions Regulator (TPR).
Under the new registration process, master trusts will have to hold enough capital to cover the cost of a worst-case scenario, such as the cost of transferring to another scheme or of winding up, without charging members.
Some 93 per cent of respondents strongly agreed the new authorisation regime was a good thing, with 87 per cent believing it would accelerate consolidation and collaboration.
According to TPR, 30 master trust companies have decided not to apply for authorisation and already have or plan to exit the market.
PMI’s research also showed 60 per cent of participants believed there would be no more than 20 master trusts operating in five years' time.
According to Lesley Carline, PMI’s president, the report showed the master trust sector "must overcome significant obstacles if it wants to offer good service delivery for members".
She said: "However, the figures also indicate that much of the industry, including some major players in the master trust sector, are largely aligned and eager to work together to help tackle industry issues."
The industry body established a working group which will develop this collaboration further, which includes Atlas Master Trust, BlueSky Master Trust, Eversheds Sutherland, Now: Pensions, Origo, Pinsent Masons, Scottish Widows and Smart Pension.