Pension savers blocked from financial transactions on new dashboards
The House of Lords last night voted on important changes to the Pension Schemes Bill 2020 which includes how long-awaited pensions dashboards will operate.
As part of the amendments, the peers voted in favour of ensuring private commercially-run dashboards will not be allowed to carry out transactions without parliament approval.
Baroness Drake, said: “Allowing transactions on commercial dashboards, such as the transfer of assets, could provide new opportunities for detriment. 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.
“It is to be remembered that pension transaction decisions are mostly irreversible, and poor decisions can be financially life-changing in their impact.”
However, she added that the amendment isn’t to disallow financial transactions in the longer-term.
“It recognises that the consumer protection issues are of such importance and magnitude that the decision to allow transactions must be preceded by the approval of parliament,” she said.
Another important amendment also related to commercial dashboards not being available before the publicly-run MaPS dashboard is operational – for at least a year.
Lord Sharkey said: “It is vital to allow the MaPS dashboard the best possible chance of reaching a wide public and establishing MaPS as a trusted and independent operator. This amendment would provide the MaPS dashboard with a head start of about 12 months. Without that, I doubt that MaPS would be able to do any of those things very successfully. I doubt that it could establish a wide customer base. If it is competing from the start with rival commercial organisations and their dashboards, those rival dashboards, whose eventual presence I would welcome, would be provided by organisations that have more resources than MaPS does, more consumer-facing expertise and more experience and skill in communications with consumers.”
Kate Smith, head of pensions at Aegon, welcomed the amendments and said the purpose of pension dashboards is to let savers see all their pensions online in one place.
“This will be a valuable way of savers keeping track of their pensions. But once they have found their pensions, savers may wish to start consolidating these into modern schemes which tend to have not only lower charges, but also better engagement tools to help them plan for retirement.
“Pension scams are on the rise, and this is a risk well-recognised within the pensions industry. All dashboards must be regulated and meet high standards to protect members from scammers. This should include having the ability to stop transfers when suspicious activity is triggered by warning systems,” she said.