UK GOVERNMENT
Pension scams – Department for Work and Pensions publishes consultation paper on empowering trustees and protecting members – 14 May 2021
The Department for Work and Pensions (DWP) has published a consultation paper seeking views on the proposed Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021 (the Regulations). The Regulations require trustees or scheme managers of occupational and personal schemes to ensure that at least one of four conditions is met before they act on a pension transfer request from a member of their scheme.
The Regulations have been proposed as a way to help stop social media scammers trying to steal people’s pensions. Under the new plans, suspicious requests could be stopped if pension savers have been approached to access or transfer their savings uninvited via social media. Such unsolicited contact would trigger a ‘red flag’ which would mean pension trustees or scheme managers can block it. The Pension Scams Industry Group estimates 5% of all transfer requests give trustees and scheme managers cause for concern.
In particular, the Regulations introduce a new red and amber flag system. These will allow for transfers to be prevented or paused whilst the member takes guidance about the possibility of scams. Red and amber flags are triggered when one, or a combination, of a specific set of circumstances are present and indicate fraudulent activity. A red flag gives the trustee power to block the transfer, while an amber flag allows them to block the transfer until the member provides evidence they have taken specific transfer scams guidance.
The consultation is aimed at anyone who has an interest in pension transfers, in particular pension scheme trustees and managers, and pension scheme members. The consultation closes on 9 June 2021 and the DWP intends to introduce the regulations in autumn 2021.
Pension Scams – Empowering Trustees and Protecting Members: Consultation on The Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021
Webpage
Press Release
HM TREASURY
Insolvency arrangements for insurers under FSMA – HMT publishes consultation paper – 20 May 2021
HM Treasury has published a consultation paper on proposed amendments to the insolvency arrangements for insurers that apply under the Financial Services and Markets Act 2000 (FSMA). The paper sets out the government’s approach to amending the existing insurer insolvency arrangements to ensure they remain current and consistent with best practice. The proposals, outlined in chapter 2 of the consultation paper and Annex B, include:
- amendments to section 377 of FSMA to widen the existing power for a court-ordered write-down of an insurer’s contracts and liabilities to a broader set of circumstances, making it more robust and usable;
- the creation of a new court-appointed ‘write-down manager’ to oversee and implement a court-ordered write-down under the amended section 377; and
- changes to the protection provided by the Financial Services Compensation Scheme (FSCS) in the event of a write-down under section 377, where the PRA will be given powers to, at its discretion, amend the compensation rules to make FSCS protection available to protected policyholders whose contracts are written down.
The changes aim to ensure that the PRA and the FCA have the tools to manage the failure of an insurer in an orderly way, and provide protection to policyholders. As well as providing continuity of cover for policyholders by allowing earlier intervention by the regulatory authorities when an insurer suffers financial distress, the new provisions are also intended to mitigate business disruption and losses for insurers in distress.
The consultation closes on 13 August 2021.
Consultation paper: Amendments to the Insolvency Arrangements for Insurers
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Response form
FINANCIAL CONDUCT AUTHORITY and pensions regulator
Pensions consumer journey – FCA and Pensions Regulator publish joint call for input – 18 May 2021
The FCA and the Pensions Regulator have published a joint call for input on the behaviour of consumers at key points in the pension saving journey with a view to improving pension outcomes.
The combination of auto-enrolment and the shift towards saving into defined contribution schemes means the risk of investment decision making, and much of the responsibility for retirement outcomes, have passed to the consumer. Many pension customers are struggling, according to the FCA and the Pensions Regulator, to engage with their pensions, meaning that they are more likely to fail to make decisions that optimise their pensions saving, remain in poor performing products and become susceptible to scams.
Feedback is sought on the main behavioural biases that influence saver engagement with pensions, the structural issues impacting pensions and barriers to engagement. More specifically, the regulators are requesting information about the data used by firms to monitor and improve engagement by different cohorts of consumer, and feedback on what can be learned from other industries to drive the use of technology as an engagement tool. They are also keen to establish what type of support can be given to employees in their selection of a workplace pension. Finally, the call for input asks whether there are areas of regulatory overlap between the FCA and the Pensions Regulator that cause problems for the consumer journey.
The deadline for comments is 30 June 2021.
FCA and the Pensions Regulation: Call for input – Pensions consumer journey
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