My Lords, I completely appreciate my noble friend’s desire to ensure that the information on the dashboard is accurate and secure. I absolutely agree that accurate information is essential to the effectiveness of a pensions dashboard. The answer ultimately must lie with appropriate regulations and sanctions. The Government believe that these protections are in existing regulations, and that the relevant regulators have the powers to intervene if compliance is not maintained. Having said that, I shall explain in a minute what work is going on in relation to this set of proposals.
In relation to personal and stakeholder pensions, rule 9.1.1 in the FCA’s senior management arrangements systems and controls sourcebook requires pension providers to
“arrange for orderly records to be kept of its business and internal organisation, including all services and transactions undertaken by it, which must be sufficient to enable the FCA … to monitor the firm’s compliance”.
If a scheme fails to meet these requirements, the FCA will select the most appropriate regulatory tool in the circumstances. Responses are proportionate and could include supervisory intervention.
Where enforcement action is deemed appropriate, the FCA aims to ensure that the sanction is sufficient to deter the firm or individual from reoffending and deter others from offending. Where it takes disciplinary action against a firm or an individual, it will consider all its available sanctions, redress and restitution powers, including public censure, financial penalty, prohibition, suspension or restriction orders; it has quite an armoury.
Regarding occupational pension schemes, trustees and managers are also required under existing legislation to put processes in place to ensure that the data they hold is accurate. Section 249A of the Pensions Act 2004 and the internal controls regulations 2005 require occupational pension scheme trustees to establish and operate internal controls that are adequate to ensure that the scheme is administered and managed in accordance with scheme rules and the law.
If a pension scheme fails to administer the scheme to a sufficient standard, or to comply with any other aspect of pensions legislation, the Pensions Regulator is able to issue an improvement notice. Where trustees fail to comply with an improvement notice, the regulator can issue a fine of up to £5,000 in the case of an individual or £50,000 in other cases.
My noble friend and the noble Baroness, Lady Sherlock, stressed the importance of promoting data quality on dashboards to scheme providers. Pension trustees and providers have been aware of our intention to introduce dashboards for some time now. We have been clear that they should start preparing their data now. The Pensions Regulator has increased its scrutiny of scheme records in recent years, and launched a specific targeted initiative in October 2019. It will take time to resolve data issues, which have in some cases been ongoing for decades, but the regulator is seeing good results from its engagement. There is still work to do, as my noble friend will be the first to agree.
An in-depth understanding of the challenges that pension schemes and providers will face in complying with compulsion is essential. The industry delivery group has therefore commissioned specialist independent and qualitative research. This will be conducted on a completely anonymous basis and will explore the challenges of meeting the requirements on data through deep-dive interviews with sample pension providers and schemes. This builds on the Pension Regulator’s insight. It will inform the delivery group’s recommendations for data requirements, taking into account the needs of different scheme types. It may be helpful to my noble friend if I note that, as part of the delivery group’s activity, a priority is to consider these specific items of people’s pensions data, which pension providers and schemes should supply for dashboard displays.
Experiences from other countries with dashboards indicate the importance of agreeing data standards with all industry stakeholders and the benefits of using the widest possible consumer research. The industry delivery group, working with its steering group, is developing a data-scope paper, which will highlight its latest thinking on dashboards’ data across the whole pensions industry. The IDG plans to publish this paper in due course, asking industry for feedback and, in particular, its provision of additional evidence where it exists.
The first iteration of the industry working group on data will effectively involve the whole industry before a small, focused working group will then refine this data thinking as we move on through the spring. I therefore hope that my noble friend can be reassured that the process that we have in mind has several stages to it, that they are logical stages, and that they should tease out the issues that she has very rightly drawn attention to in her remarks.
I hope that I have illustrated that the current obligations placed on schemes by the FCA and TPR, together with the enforcement powers which both regulators have, combined with the work that I have just described, are sufficient to ensure that the schemes will provide accurate data to the dashboard. I hope, therefore, that my noble friend will feel able to withdraw her amendment at this stage.