He is unequivocal in his response:"The introduction of personal pensions and the removal of the employers’ right to make pensions a condition of service was a watershed moment for the industry; one that didn’t go well.
"Too many people left their workplace pensions for personal pensions for the wrong reasons. This of course led to the first pension mis-selling review, which was launched in 1994, and, ultimately, negatively impacted the reputation of the industry.
"I had hoped that the industry would have learned valuable lessons but, following the British Steel scandal, I remain to be convinced that everybody did learn lessons.”
In fact, he remembers three significant pension mis-selling scandals; memories no doubt seared onto his mind after his time working for the then Financial Services Authority between 2000 and 2002, when a lot of the pension mis-selling scandals of the 1990s were being unravelled.
But has anything gone right?
Brown highlights a few things, but says more is needed:
- We removed the right of employers to make people join as a condition of service in the late 1980s, and then in 2012 the government reintroduced this right via auto-enrolment.
- Regulations changed significantly for personal pensions – we have had at least four different regulators and, for workplace schemes, we have had two.
- Pension simplification was also a huge moment that got lost, as we have spent recent years making pensions more complicated.
Changes for the better
Brown says if he could change policy or implement new regulations to make things better, there would be a host of improvements he would like to make.
He says: "Auto-enrolment has had a significant and positive impact on the market, but I would like to see it improved. We should start with the 2017 Automatic Enrolment Review being implemented, once we are through the cost of living crisis.
"Beyond that, I would like to see better demarcation lines between workplace and retail schemes, which, in my view, would prevent regulatory arbitrage that ultimately leads to poor decision-making where the workplace member carries the risk.
“When the value for money metrics are defined for the whole market, they must be available and accessible to consumers at the earliest opportunity.”
But with 2023 shaping up to be another tough year, with pre-Brexit regulation starting to be unravelled against a backdrop of financial and political uncertainty across the globe, what does Brown think advisers need to watch out for this year?
Brown says: "The Department for Work and Pensions has already signalled its intention to publish new value for money metrics, which we expect to see early in the New Year.
"This may change how defined contribution schemes and products are judged, initially by pension professionals but ultimately by consumers."
He adds: "The much-anticipated response from the DWP on its consultation about decumulation in DC pensions should be a beneficial one. It has the potential to lay out a clearer pathway for supporting savers towards the best use of their pension pot.
“We expect the conversation about schemes investing in less liquid assets to continue throughout 2023, especially after the Productive Finance Working Group published its guides to the issue in November.
