Background

Pensions dashboards will be secure digital interfaces that allow consumers to find their pensions and view basic information about them. The Government has created the legislative framework for its pensions dashboard initiative and intends to make the FCA responsible for regulating commercial bodies that operate pensions dashboard services ("PDS"). This will be achieved by introducing a new regulated activity, meaning that a firm wishing to operate and make a pensions dashboard service available must: 

• be or become FCA authorised; 
• obtain the regulatory permission to undertake the new regulated activity; and
• meet the FCA's requirements.

On 1 December, FCA published CP22/25 to consult on its proposed regulatory framework for this brand‑new market.

Executed well, pensions dashboard services have the potential to deliver genuine consumer benefits. But the FCA's view is that without a robust regulatory framework in place, consumers using pensions dashboard services would also be vulnerable to harms. The FCA's draft rules therefore seek to strike an appropriate balance between protecting consumers and harnessing the opportunities dashboards create to engage savers with their pensions. 

The FCA's proposals

The proposals in the CP include: 

• Robust governance, systems, controls and oversight - Firms must have proper controls in place to manage risks. The FCA proposes to apply the SMCR regime and its SYSC rules on conflicts, risk management and outsourcing to PDS firms, but in a proportionate way to reflect that there will be no transactions or client money passing through dashboards and some firms in this new market may be relatively small.
• Prudential requirements, resolution and redress - Consumers who suffer harm through the action or inaction of a PDS firm should be eligible for redress. So, PDS firms will be subject to the complaint‑handling requirements and dashboard users will also have recourse to the FOS. The FCA is not currently proposing FSCS cover for the new regulated activity as there are limited direct risks to consumers’ money from operating a pension dashboard service. This may change later. Instead, new prudential requirements are designed to ensure the PDS firm has adequate financial resources to meet redress liabilities and exit the market in an orderly fashion, should it need to.
• Specific standards: conduct standards to govern dashboard activities - The FCA is consulting on key conduct proposals designed to give firms scope to innovate. These set the minimum requirements; the Consumer Duty will apply as well.

Next steps

Feedback on the proposals is sought by 16 February 2023. The FCA is aiming to publish its final rules in Summer 2023, and the authorisations gateway for PDS firms will open shortly thereafter.