In a few weeks Covid-19 has transformed the rate of technology adoption across our industry. Projects that might up until February have taken a year to deliver have been put live in weeks, if not days.
Nowhere is this clearer than the adoption of electronic signatures. Faced with the prospect of electronic business or no business, long-standing resistance to progress has evaporated.
It remains to be seen however, if this will be applied consistently across all areas of operation, or simply limited to those situations where pension providers attract revenue. The acid test of this newfound flexibility may be if accepting electronic signatures extends to letters of authority.
This is especially relevant in the case of workplace pensions where, more often than not the adviser to an individual member will be a different firm to that which placed the scheme for the employer.
When FTRC benchmarks workplace pension providers operational capability, we always ask if an organisation can show more than one firm as entitled to receive information for an individual member. Occasionally we come across pension providers who claim such capability, but on further investigation it transpires not to be the case. It’s an issue I have been flagging to pension providers for over 15 years, but I have yet to find a single organisation that has acted to address this.
The best normally achieved is a manual note placed on the client’s record with the pension provider that they have permission to supply information to a second adviser. This causes real member detriment. It makes it far harder for example to build a picture of all a client’s retirement planning including their individual and workplace pensions. By now such information should be seamlessly integrated into their own financial planner’s client portal. This is a perfect example of how dashboards should by now have improved consumers’ understanding of their pensions.
The FCA‘s Open Finance initiative may present a more practical solution to this problem. The FCA have already indicated their intention to reuse as much as possible from the Competition & Markets Authority-led Open Banking initiative. The Open Banking project, delivered an excellent model for client consent. This imposes a legal obligation on banks to make information available to any authorised third party provider with the right regulatory permissions – account information service providers and payment service providers – a consumer has decided to grant permission to access their data. If adopted into Open Finance this would place an obligation on any pension provider to supply information to any authorised third party provider (TPP), such as an adviser’s client portal provider.
Unfortunately, European banks succeeded in having a 90 day re-authentication period which, if adopted for Open Finance would mean an adviser would have to obtain a fresh consent from their client every 90 days. Clearly this would be a major barrier to adoption. The Financial Data and Technology Association FDATA have proposed a logical alternative which would require TPP’s to remind clients every 90 days that they have granted their consent for their data to be used.
The barriers to a member’s adviser accessing the information they need cause substantial consumer detriment every day. The above is just one example of how real consumer detriment can be addressed by an effective approach to Open Finance. Because of Covid-19 the closing date for the FCA‘s Call for Input on Open Finance has been extended to 1st October 2020.
If you have not made a submission, I would urge you to respond. The above is just one example of how effective Open Finance could make the industry far more efficient. The relevant documents can be found here:FCA Call for Input https://www.fca.org.uk/ publications/calls-input/call-input-open-finance . Three other key FCA papers that should be read at the same time to have a full understanding of key issues:
- The Data Rights Advisory Group paper https:// www.fca.org.uk/publication/documents/data- rights-advisory-group-open-finance-advice-note. pdf
- Cohesion and Interoperability Working Group paper https://www.fca.org.uk/publication/ documents/cohesion-interoperability-advisory- group-open-finance-advice-note.pdf
- Incentives Working Group paper https://www. fca.org.uk/publication/documents/incentives- advisory-group-open-finance-advice-note.pdf.