Transparency rules to hit EBCs, vertically integrated providers and boutiques – Widows

FCA and DWP pressure on hidden pension charges will squeeze boutique managers out of the market, force vertically-integrated players to choose the link in the chain where they want to play and lead to a fresh round of rip-off pension accusations.

That was the prediction of Scottish Widows head of industry development Peter Glancy at a briefing in London today.

Glancy predicted media outrage when FCA and DWP moves to impose similar levels of charge transparency as required by EU initiatives the Markets in Financial. Instruments Directive (Mifid) and the regulation of Packaged Retail and Insurance-based Investment Products (Prips) reveal that pension costs could be more than double the figures currently publicised. Mifid II and Prips do not apply to pensions, but the government is working to achieve a similar level of transparency for retirement savings vehicles.

Glancy said his company was currently unable to extract precise data on issues such as how much money is being spent on bundled research costs for its default fund, an issue he says in all likelihood impacts the majority of Widows’ competitors.

He also called for TPR regulation under master trusts to only be allowed for not-for-profit organisations, such as Nest and People’s Pension. He predicted that new regulations, expected to be unveiled in April, would prohibit EBCs and corporate IFAs from setting up master trust schemes and extracting revenue from them.

Glancy said: “The reforms currently going through the FCA and DWP will require fund managers to put in place infrastructure to gather the data. This will cost millions and some boutiques will struggle, and some will leave the market. This is adding to the pressure from Prips and Mifid.

“If an EBC is currently making money opaquely, they won’t be allowed to do so in the future. The same applies to the vertically integrated pension providers. We have already seen L&G leave the ABI and indicating that they see their future as an asset manager.

“FCA and the Prudential Regulatory Authority do not oversee master trusts. TPR should only see schemes that have been set up for the good of the members, while contract law is more appropriate for operators working in the profit-making space.”

Exit mobile version