Scottish Widows  

FCA charges proposals to 'confuse consumers'

FCA charges proposals to 'confuse consumers'

Scottish Widows has told the Financial Conduct Authority to limit the information on costs and charges to be disclosed to consumers to avoid confusing them.

In its response to the watchdog's consultation CP19/10: Publishing and disclosing costs and charges to workplace pension scheme members and amendments to COBS, which closed in May, the provided agreed that fees should be published in independent governance committees' reports.

However it stated this should be done as an appendix to the main report and the number of funds which are presented should be kept to a minimum so as to not overwhelm consumers.

The FCA is proposing that providers’ independent governance committees disclose costs and charges on an ongoing basis to members.

The consultation was the result of recommendations made by the Office of Fair Trading in 2013 – which concluded that competition alone wouldn’t drive value for money for all savers in that market.

Since then, the FCA has been working with the Department for Work and Pensions to design and implement a package of reform measures in this area.

The goal is to ensure that scheme members can find the information about costs and charges they require to judge whether their pension scheme provides value for money and if it will meet their needs in retirement.

But Peter Glancy, head of policy at Scottish Widows, told FTAdviser the provider has about 40,000 funds available to consumers, both the ones it has created and the ones it administers as a bespoke solution for specific employers and their advisers.

He said: "It doesn't make sense to put all of those in the list of the funds available to all customers, because the list would be much longer, and you would have a whole bunch of funds on there that the vast majority of customers could never use, because it has been designed only for one specific employer.

"We're suggesting that those funds shouldn't be on the main list, there should be an alternative way of showing the members of that scheme the information."

Mr Glancy noted providing people with lots of information would overwhelm them and they wouldn’t be able to make any decisions.

He said: "If you give customers information that isn't provided with enough context around it, there is a danger that they will make bad decisions.

"If you're just making information available regarding charges - for example a cash fund might have very low charges but it won't give you a very good return at the moment, while a property fund might have much higher charges but may give a higher return.

"Most customers don't understand percentages, or compound interest, or don't even know that their money is invested or how that works."

The provider is also against the involvement of IGCs in setting out costs and charges to consumers, saying the role of the committees was to act as independent experts.