The Financial Conduct Authority will prohibit third parties from charging customers for services linked to pension dashboards as part of its regulatory framework for the initiative.
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.
“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.
