Concerns have been raised that private pension dashboard providers may push users to take inappropriate action.
Ahead of the much-awaited introduction of an online pension dashboard, allowing savers to access all of their information in one place, concerns have been raised about safeguards for consumers.
Under current government proposals, there will be privately run for-profit pension dashboards operating alongside a not-for-profit online platform.
This raises concerns about safeguards for consumers, according to a new report by pensions master trust provider The People’s Pension.
The concern is that private dashboards could present information encouraging action from consumers that while profitable for the company running the platform might be inappropriate for the user.
To guard against this risk, the report says, the government should legislate to ensure that any privately run dashboards are legally required to put the interests of the consumer first.
The report notes: “The Financial Conduct Authority will need to implement strong consumer protection based on a legal duty on providers to put customers' financial interests before their own – an approach which aligns with fiduciary duties under trust law.
“This would ensure a level playing field in terms of the governance obligations placed upon dashboard operators, set at the higher of the available governance standards – i.e trust-based.”
It is estimated that up to 18 million people will eventually use the new pension dashboard.
Demand for an online platform allowing savers to see all of their pension information in one place has grown with the introduction of auto-enrolment.
There has also been a recognition that workers are likely to accumulate multiple pensions with different companies over the course of their career.
Commenting on the need for legal oversight for pension dashboard providers, Gregg McClymont, director of policy for The People’s Pension, notes: “The Port Talbot steel worker’s pension scandal shows how easily things can go wrong.
"The strongest form of consumer protection is fiduciary law, so we’re calling on the government to pass legislation to place such a legal duty on all dashboards operators.
“We’re also calling for pensions charges to be disclosed on dashboards from the outset, for consumers to have a clear legal right to all their financial data, and for the creation of a Pensions Dashboards Authority armed with a clear statutory remit to act in the best interest of consumers."