The UK Government has been working for some time to progress its pensions dashboard initiative, introducing the new online platforms which will “revolutionise” the way people interact with their pensions by allowing individuals to see information about all of their pensions in one place online.
Any entity (other than the Money and Pensions Service (MaPS)) that wants to operate a pensions dashboard service (PDS firms) will need to ensure that they obtain the regulatory permission to carry out this specific activity (and if they are not already, will also need to become FCA authorised). PDS firms will also need to adhere to Government regulations as well as design standards issued by the PDP (the pensions dashboard delivery group) on behalf of MaPS.
Whilst the final rules for PDS firms have not yet been published – the FCA’s consultation on its proposed regulatory framework closed in February 2023 with a Policy Statement and final rules originally expected this Summer (with the aim that the authorisations gateway would open shortly thereafter) - the draft documentation nevertheless serves as a useful resource for PDS firms as you begin to consider the steps you will need to take in order to comply with the new framework, and to ensure that you are well placed to submit the relevant FCA forms as soon as possible after the rules and forms are finalised and the gateway opens.
The FCA has not yet indicated a change to its timetable, however, with the delays to the wider pension dashboard initiative announced by the Government in June 2023 (indicating a new long-stop deadline in the dashboard rules for pension providers of 31 October 2026) it could well be that the publication of final rules for PDS firms is pushed back.
In cooperation with the FCA, the PDP has separately consulted on its proposed design standards, with final standards earmarked to be issued on a similar timetable to the FCA.
What is a pension dashboard service?
The new regulated activity will bring within the FCA’s regulatory remit firms which connect to the central digital architecture for pensions dashboards (developed by the PDP) and through whose digital service the customer can request and see information about their pensions.
This includes where a third party makes the dashboard available under an arrangement with a PDS firm.
Specific rules will also apply to other related services connected to the regulated activity (for example data export and post-view services).
The New Rules
The FCA’s proposals broadly fall into 2 categories:
- The application of the minimum standards that the FCA expects of all regulated financial services firms to new firms undertaking the new activity (firms that are already authorised will be familiar with these expectations and how they apply in other parts of their business). This includes the FCA principles for business, SMCR rules, Consumer Duty, and systems and controls rules. The application of certain of the FCA’s high level standards (e.g. SYSC rules) will depend on the activities that a firm carries out and any other permissions it holds, and firms will need to be mindful of any nuances; and
- Requirements that are specific to this new activity.
The new rules that PDS firms will need to familiarise themselves with include rules in the following areas:
- Disclosures, signposts and warnings
The proposed rules in this area are largely format neutral and outcome-focused.
- Outsourcing and third party services
The definition of the new regulated activity will not preclude authorised firms from involving third parties in bringing dashboard services to market (for example through outsourcing, or making legitimate dashboard services operated by regulated PDS firms available to consumers via third parties – perhaps through white labelling, licensing, syndication or third-party hosting). The proposed rules centre around avoiding regulatory arbitrage, and ensuring that the consumer is no less protected if a third party is involved in the creation, development or route to market of the dashboard service they use.
- Data export (i.e. the process by which customer view data is extracted or “exported” outside the PDP ecosystem)
The FCA propose to permit PDS firms to take one of three approaches to data export (but ban other types of data export):
- Not offer data export
- Offer customers the option to export data to themselves
- Offer customers 2 options: (i) export to self and (ii) export to the PDS firm used by the customer to view their data (or regulated firms within the same group with the permission to advise on investments, exclusively for the purpose of advising the customer) (the primary benefit of permitting data export would be to auto-populate tolls, calculators and other services that a PDS firm may wish to offer its dashboard users to support retirement planning and engagement)
The FCA has proposed conduct rules to protect against consumer harm where data export is offered.
- Post view services
Such services might include advice (including robo-advice), guidance, modellers, calculators or similar tools. The FCA propose to permit PDS firms to offer additional services beyond the find and view of the core dashboard, but only after displaying a customer’s pensions information. Only the PDS firm (or a connected person giving regulated investment advice) will be able to offer and, where they choose to, charge for any services accessed via the dashboard. Post view services will need to adhere to certain conditions.
Some post view services may well be services that are subject to existing FCA Handbook requirements, and some may even be another regulated activity. Where this is the case, PDS firms will need to ensure they have the necessary permissions, and adhere to the relevant rules.
- Scam Prevention
Get in touch with us if you’d like some help with:
- navigating the process of obtaining the appropriate regulatory permission for providing a pension dashboard service;
- understanding and adhering to the proposed, primarily principles based, Design Standards issued by PDP;
- navigating and adhering to the FCA’s proposed PDS framework requirements; and/or
- the FCA authorisation process (where not already FCA authorised). This could include (i) reviewing and advising on the firm’s ability to meet the FCA’s threshold conditions; (ii) preparing the application forms and business plan; (iii) advising on interactions with the regulator; and (iv) understanding and navigating the ongoing regulatory obligations which will apply post-authorisation (including the FCA Principles for Businesses, SMCR rules and the new Consumer Duty).
You can find the FCA's consultation on its proposed regulatory framework for PDS firms here