Since the emergence of a separate identity for the FCA, cross communication between itself and other regulatory bodies has been key in ensuring cohesion across the compliance and regulatory landscape. Tim Chapman discusses the continuing partnership between The Pensions Regulator and the FCA.
Since the split and emergence of a separate identity for the Financial Conduct Authority, cross communication between itself and other regulatory bodies has been key in ensuring cohesion across the compliance and regulatory landscape. The Pensions Regulator and the Financial Conduct Authority are a prime example of this; set to continue and improve their existing relationship to ensure that those involved in workplace pension schemes are protected and that advice and directives are consistent.
So what will happen going forward?
Defined Contribution pensions have been a continuing area of discussion, ensuring that whether their pension is “trust or contract based [it] is well run and will deliver a good outcome”. On 21/3/14, a new guide was issued to inform those involved with pension schemes understand how the Pensions Regulators and FCA will work together to ensure better outcomes and transparency for consumers involved. It details how trust based and contract based pension ventures will be affected by the convergence of regulatory objectives. However, each regulatory body has individual overarching objectives that will ensure that their collaborative work does not affect their individual mission statements.
The Pensions Regulator .v. Financial Conduct Authority
The Pensions Regulator is the UK’s driving force behind compliance and policy issues relating to work-based pensions. The Pensions Regulator will continue to oversee the development, risk and outcome protection of benefits for participants and to encourage system and administrative improvements to reduce risk relating to enrolment issues.
The FCA has a primary ‘strategic objective’ to ensure consumer protection, safeguard perception of the UK Financial Services Industry, yet also encourage commerciality amongst providers through regulatory adherence and transparency.
Split objectives and combined vision will ensure that work based pension schemes will receive the appropriate amount of regulatory support and scrutiny to retain consumer loyalty and trust.
As with previous regulatory directives, the FCA will focus on how sales objectives and advice is met and given to companies and consumers alike. They will also have an overseeing function relating to consumer risk where pension providers offer both personal and work based pensions, as well as prudential responsibility relating to firms that do not report directly into, or that are monitored solely, by the PRA.
All of this will enable TPR to focus it’s attention away from market based regulatory issues and instead maintain focus regarding compliant administration and safeguard actions and policies relating to the Pensions Act 2008.
Will it work?
There has been a communicative shift on how the FCA will move and present itself amongst regulatory partners and this is a clear example of how the FCA in particular is aiming to create a united front across the sector. In relation to work related pensions, the FCA’s overseeing capacity adds clout whereas TPR will gives technical specialisms to enforce regulatory and policy change to protect consumers interests. The future of our pensions looks bright at present!