According to its new consultation - published on December 1, on the same day that the Pensions Dashboards Programme issued its own consultation into design standards - the FCA recognised that some dashboard providers will look to third-party agreements for areas including licensing or third-party hosting.
Any agreement with a third party, however, must allow dashboard providers to monitor that third party’s activities, while third parties will be prevented from making changes to the dashboard service and from charging customers for dashboard-related services.
Even after the new rules and standards are settled in the summer of 2023, extensive user testing will be required to ensure they work in practice. Nigel Peaple, PLSA“The FCA is right to put consumer protection first,” People’s Partnership director of policy Phil Brown said.
“Commercial use of pensions dashboards, including dashboard enabled transactions, should only come when customer behaviour on pension dashboards is well understood.”
The PDP, meanwhile, is seeking to understand whether its design standards have struck the correct balance between guaranteeing consumer protections while also allowing for flexibility to cater to different audiences.
In the FCA’s final rules for the regulations, published on November 1, the regulator said providers would have until August 31 2023 for implementation, in order to align with the government’s extension to a deadline on occupational pension schemes. This deadline was delayed from June 30 2023.
The FCA and PDP consultations will both run until February 16 2023.
Over a year’s worth of user testing may be required
The FCA and the PDP’s consultations follow that of the Pensions Regulator, which in November threatened fines of up to £50,000 for non-compliance on the initiative.
The FCA admitted that it did not know how big the dashboard service market would be, predicting that it would be small. It also said that it did not know when providers would apply for authorisation, with firms able to do so shortly after the regulator publishes its final dashboard rules in the summer of 2023.
“We do not think it would be proportionate to recover project costs from [pension dashboard service] firms through their periodic fees in the first year of operation,” it said.
“We also think this would disadvantage firms which choose to enter the market first. Instead, we propose to recover a contribution towards the project costs through the application fee.”
In November, the Money and Pensions Service disclosed that the dashboards initiative had driven a 26 per cent increase in its expenditure on its pension streams for its year to March 31 2022.
In addition to restrictions on third parties, the FCA’s consultation also revealed that users will be allowed to export information about their pensions – such as their pot size and their projected income – from the dashboard to themselves or to their provider.
The dashboard provider will then be able to offer the user ‘post-view services’, such as advice on investment, contributions and consolidation.
“This will elevate pensions dashboards from being merely a static source of information to an interactive service that helps people engage with their pension saving and plan for the future,” AJ Bell head of policy development Rachel Vahey said.
Providers will have the option, however, of not offering the option to export data, while other types of data export are banned, partly to deter scammers. Customers’ data, meanwhile, will only be allowed to be stored for 30 days, with the clock restarting each time a customer logs in within that period.
“Alongside the design standards that the Pensions Dashboards Programme is developing, the framework should provide clarity on what dashboards are permitted to do with the data provided and ensure consistency between different dashboard providers,” Broadstone pensions dashboard delivery manager Jon Pocock said.
“This is critical to give schemes confidence on how individuals will see information and how it is being utilised.”
Pensions and Lifetime Savings Association director of policy and advocacy Nigel Peaple predicted that at least 12 to 18 months' of user testing would be needed from the summer of next year before dashboards can be offered to the public.
“It is essential that dashboards are safe for savers so, now, more than ever, everyone should focus on doing dashboards well rather than quickly,” he said.
“Even after the new rules and standards are settled in the summer of 2023, extensive user testing will be required to ensure they work in practice.”
Providers can devise their own language
The PDP published a call for input on standards in July, which closed in August. Respondents emphasised the need for extensive user testing before they could offer a full assessment of the standards.
Parliament has since approved the regulations for pensions dashboards, allowing the PDP to set out its standards. These will be issued in their final form to coincide with the publication of the FCA’s regulatory framework next year.
The PDP’s latest consultation invites responses as to whether it has struck the right balance between consumer protection and allowing dashboards to tailor their approaches to their audiences.
It also sought feedback on its decision to allow providers to author their own terminology instead of imposing uniform requirements, as well as whether it is requiring the right amount of information to be displayed in the dashboard’s pensions summary.
Quietroom director Simon Grover said: "How dashboards are presented and communicated will have a huge impact on how users will respond, and we need to ensure that savers are not inadvertently nudged to do the wrong thing.
“User testing and continual refinement will be crucial in delivering a positive saver experience, and we need an agile approach to ensure dashboards evolve in light of experience and feedback."
Alex Janiaud is Deputy Editor of Pensions Expert, FTAdviser's sister publication
