Financial Guidance and Claims Bill [HL] — House of Lords, 2018-05-01
Topic: Labor
Peta Buscombe (Conservative, Centre-right): My Lords, throughout the passage of this Bill, the importance of increasing the number of people taking Pension Wise guidance has been debated and recognised on all sides. We all want people to make more informed decisions and to make it the norm to use Pension Wise before accessing their pension Amendments 4, 7, 8 and 36 place new duties on managers and trustees of all defined contribution pension schemes. They build on proposals put forward by noble Lords who introduced an amendment seeking to give those accessing pension flexibilities a stronger, last-minute nudge towards Pension Wise. They also draw on the proposals put forward subsequently by the Work and Pensions Select Committee in another place to require that people should have to make an active decision to opt out, rather than be able to opt out passively. I want to stress that the guidance given under these amendments can be provided only by the single financial guidance body. This is by virtue of the interaction between Clauses 3 and 5 and Amendments 7 and 8. Subsection (7) of the new clause inserted by Amendment 7 and subsection (6) of the new clause inserted by Amendment 8 define the pensions guidance referred to in the amendments as the information or guidance provided in pursuance of Clause 5. This clause requires the new body, as part of its free and impartial pensions guidance function in Clause 3, to deliver what we know as Pension Wise guidance Throughout this process, discussions with Members of both Houses and key stakeholders brought out two core issues. The first was that any requirements should be based on the presumption that people have not already accessed Pension Wise guidance. The second was that, if people are to opt out of accessing such guidance, it might be desirable for that opt-out decision to be made and communicated to a body other than their own pension scheme. These amendments to the Bill provide a workable way to achieve the consensus position that was reached in those discussions. When an individual seeks to access or transfer their pension pot, these duties will ensure that members are referred to Pension Wise guidance, that members receive an explanation of the nature and purpose of that guidance, and that before proceeding with an application, subject to any exceptions, schemes must ensure that members have either received Pension Wise guidance or have explicitly opted out Rules and regulations must specify how, and to whom, the member must confirm that they are opting out. This allows for the opt-out process to be separated from schemes. Rules and regulations will set out the detail of the opt-out process based on evidence of what helps people take up Pension Wise guidance. This approach is completely aligned with the Select Committee in another place. The committee recommended that the details of how an individual could expressly turn down the opportunity to receive guidance should be set out in FCA rules following public consultation It is important that new requirements introduced in this area are operationally deliverable for schemes and the new guidance body. Detailed rules and regulations should be based on evidence of what delivers the outcome we all want: more people taking up Pension Wise guidance and a robust opt-out process. These amendments provide scope to test what works best and to update the approach as the pensions landscape, technology and the needs of the users change. This might be through direct hand-off of the member from the scheme to Pension Wise, including for the purpose of conducting an opt-out process, or through providers booking Pension Wise appointments for their members Further, these clauses also require the FCA, the Secretary of State and the new body to work together to develop and deliver these new requirements. As is customary, before making the rules and regulations the FCA and the Secretary of State will need to consult, providing the proper opportunity for public scrutiny of proposals before they are commenced.