The House of Lords voted last night in favour of excluding all financial transactions from the pensions dashboard to protect savers from scams.
Peers debated amendments made to the Pension Schemes Bill yesterday afternoon (June 30), with the majority showing support for a clause which will force dashboards to only display information on a saver’s pension.
The amendment, brought by Labour peer Baroness Drake, will ensure any dashboard service will not go beyond finding and displaying information on a consumer’s savings and will not allow financial transactions to take place before Parliament can consider the matter and approve this through legislation.
Baroness Drake said this move was important to stop savers being targeted by fraudsters and losing all their savings.
She said: “The impact of scams, mis-selling, provider nudging and poor decision-making could increase if an individual’s total savings are displayed in one place, the dashboard allows financial transactions, and the wrap of consumer protection is not fit for purpose.
“For some vulnerable customers, poor decisions could be more costly if the impact is across all their savings, and if people are scammed, they could be scammed out of everything.”
Before any financial transactions can take place Parliament will need to understand how the dashboard is driving behaviours, of both consumer and provider, and how consumers will be protected, Baroness Drake added.
Conservative peer Baroness Altmann, who was previously pensions minister, had backed this amendment saying there would be “significant dangers should there be an easy transaction button on a pensions dashboard right from day one”.
Meanwhile, Lord Vaux said dashboards should do not dismiss the need for people to seek advice when making decisions on their pensions.
Lord Vaux said: “Dashboards are being created primarily for the purpose of allowing people to obtain better information about their situation.
“That information will be helpful when deciding whether to carry out some transactions but it does not in any way negate the need for proper advice, so allowing dashboards to become transaction platforms would make ensuring that proper advice had been taken much more difficult.
“At least until they have been fully established and the implications well understood, it really must make sense to prohibit dashboards from becoming transactional platforms.”
The amendment was passed by 281 votes to 241.
The Lords also passed an amendment blocking commercial companies from operating dashboards until a publicly-run service, launched by the Money and Pensions Service, had been running for at least a year.
This amendment was passed by 270 to 236.
Baroness Altmann said: “There has to be significant concern that, once a dashboard is up and running, we will need to learn lessons before further activity takes place.
“If we have a public service dashboard for a minimum of a year, we will have chances to learn lessons that otherwise might not be learned—particularly in light of such issues as data concerns, types of protected benefits and requirements for Maps guidance.”