September was hugely significant in the context of Open Finance and the path to helping the millions of employees, who cannot afford traditional financial advice take more control of their financial lives. The deadline was passed for credit cards to be added to Open Banking services.
This is another important data set that can be used in giving consumers a better understanding of their month to month income and expenditure. But it also highlights quite how far the long term savings industry is slipping behind other sectors.
Currently the pensions industry is failing consumers when it comes to giving them the information they need. In doing so we are at real risk of losing what little trust we have left. Every day consumers can get more information, from more organisations, about their banking and credit transactions.
All their different accounts can be presented, in a single service, available from a plethora of sources. How does this experience compare with looking at their retirement savings?
The pension dashboards project may deliver at some point. I have a huge amount of sympathy for those at the Money & Pension Service expected to make this happen against timescales that now look hopelessly unrealistic. Delivering even a scaled down service should be considered a real success.
The FCA is I understand now moving forward with its own Open Finance project. Given the regulator’s track record in stimulating fintech, this may be the best hope for helping the long term savings industry catch up with the banking community.Giving consumers better access to information on their preparation for retirement should be something the whole industry should be falling over itself to provide. It should not be concerned at the prospect that if given good information, savers will move their funds elsewhere.
The reality is very different. In my experience commercial interests are invariably put ahead of customers’ needs. Why else was there such a clamour for government to introduce compulsion in order to make pension dashboards viable? Whatever happened to doing things because it is good for the customer?One of the most frequent complaints from advisers is the difficulty they find in obtaining full details of an individual’s employee benefits? Not just their pension scheme, but also death in service, income protection and other softer benefits.
More often than not employers are providing these benefits because they want to look after their staff. It is therefore important that employees be given full details of all that is available to them in order that they recognise the value of the benefits being provided to them.
So how can we make this easier? Is it time to establish a central employee benefits portal where companies can lodge and maintain details of their benefits packages so they can be fully reflected in any guidance or advice given? This could play a significant role in employees’ recognition and understanding of their benefits and improving the value employers achieve on their investment.
Admittedly this is something where the benefit would overwhelmingly accrue to the customer rather than the pension provider, but it could also be really valuable in delivering a holistic view of an individual’s financial and wellbeing life. Challenger banks are increasingly disturbing the big four’s stranglehold on consumers’ individual day-to-day finances by offering people a more informed experience.
Yet, by comparison, as a result of Open Banking, traditional banks now deliver a far more informed consumer experience that long term savings providers.
I believe it is time to get on the front foot.I have been saying for a couple of years that the best indication of who an individual sees as their most trusted financial adviser, be that their bank, IFA or whoever, will be defined by whose Open Banking/Open Finance tools they choose to use.
If you want to get a glimpse of what the future could be like for consumers you only need to look at the personal financial management services offered by market leaders like Intelliflo, Moneyinfo and True Potential, all of who have committed to full Open Banking capability. Failure to offer equal levels of information to that available from banks will put insurers and advisers at a growing disadvantage. It is time address this gap before we as an industry slip any further behind.