While there is no doubt that the pensions dashboards project has much to offer in terms of consumer benefit, the rate of progress has been painful. Positive though the recent DWP update was, under detailed examination too many of the lines drawn do not actually connect.
For example, while Amber Rudd and Guy Opperman talked positively about dashboards arriving, as originally expected, in 2019, when you actually read the paper the most this commits to is detailed testing this year. Dig deeper into the amount of work that needs to be done and anyone with a reasonable understanding of what is needed will recognise that, based on the scope the DWP outline, this is wildly optimistic.
It is fair to describe the DWP as having given the new Money and Pensions Service a real hospital pass, frankly setting the organisation up for failure on its first major project. While the DWP did some really good work in an intense period and we do now have government commitment to compulsion, too many key decisions have just been kicked down the road for the “delivery group” to pick up.
Perhaps the most troublesome of these is the requirement that, for the initial versions of dashboards at least, no data provided as part of the dashboard process can persist in such a system subsequently. What this means in plain English is that dashboard systems cannot keep a record of the information they obtain. This effectively renders dashboards useless for an advice or guidance process.
Since the publication of the DWP proposals I have spoken with several organisations who would have been at the leading edge of delivering dashboard services. The typical response when the persistency issue is explained is “you cannot be serious”, closely followed by a resignation to the fact that for all practical purposes this kills dashboards stone dead and that they will need to find different ways to innovate and help consumers better understand their financial future.
From a technical perspective pensions dashboards could have become a reality a couple of years ago. Sadly vested interests, especially amongst trustees of defined benefit schemes, have deliberately obstructed the process, putting personal interests before the needs of those they are supposed to represent.
The DWP has pointed out that if these organisations do not have the data necessary to support the first generation of pension dashboards available electronically, they are guilty of serious failings under the Data Protection Act and GDPR. The DWP report appears to be encouraging enforcement action by the Information Commissioner’s Office. It will be fascinating to see if the ICO acts on this.
Sadly I have become resigned to the fact that pensions dashboards are, at best, a lame duck. While millions more hours may be wasted on the idea, in practice even if it does deliver, it will be too little too late. This will only change if the Money and Pensions Service is prepared to seize the project and drive it forward aggressively. Unfortunately I see no signs of this so far.
As one door closes however another one opens. The UK benefits from a financial services regulator that is increasingly recognised as a world leader in innovation. The FCA’s 2019/20 Business Plan was bursting with initiatives to make full use of technology to help consumers while at the same time fully recognising the challenges of cyber security and committing to extensive work to ensure all necessary steps are taken to protect the public.
For me one of the most important items in the business plan is the commitment to progress Open Finance. This could digitally enable all areas of personal finance. Many people argued in the early days of the pension dashboard project that we should have started with a wider remit to address all areas of saving and borrowing.
Originally pensions were seen as the most complex issue so were prioritised. This has clearly been a mistake. The repeated failure of pension providers, especially older trusts, to provide consumers with clear information will only exacerbate the lack of trust in the sector. Open Finance can create a mechanism through which those who want help consumers can do so. I believe this is now the initiative it is most important to support.