To follow Deb Jones is a pleasure. Much more fun than following Chris Wollard, which is what I was bracing myself for. I say that with love and collegiate affection as a former Financial Conduct Authority (FCA) employee. And safe in the knowledge Chris is elsewhere.
Like the Australian Soap Opera industry, there seems to be a limited number of regulators to go around. We all end up working for each other. Like characters from Neighbours popping up in Home and Away. I’m half expecting a call from Madge and Harold to tell me Bouncer has found a child down a disused well.
The only way I’d not be here is if I completely changed careers. And Australian Equity are very fussy about who they let in to their industry.
Pension savers are agnostic about how something is regulated. They want a good outcome, reassurance their money is being looked after and that a financially sustainable retirement is a reality. For the most part they don’t even know we exist. Quite probably only becoming aware of us in time of need.
I have mixed feelings about this. It’s slightly disheartening to go to another dinner party and explain what you do. Only to be met with the response. ‘Well I never knew they existed’ but in another way why should pension savers be concerning themselves with regulation if they get the outcomes they need?
Savers are the reason we are working together. Though at this early stage we are all – necessarily – going to be focussed on improving ways of making our organisations work better together. Overcoming those inviable barriers of pride, tradition, demarcation and ego. What we will see once those boundaries dissolve are savers looking to us to help them manage their financial futures.
It’s for us as regulators to resolve and manage their issues – hence a joint strategy. We have spotted areas across the pensions landscape that are of interest to us both. Areas that would benefit from our joint focus. Though today is about the progress made in the year since we launched our strategy, my appointment at The Pensions Regulator (TPR) means I’ll be looking slightly further ahead.
We launched the strategy with aim of ‘strengthening our relationship and taking joint actions to deliver better outcomes for pensions savers and people entering retirement’.
I’m quoting from the foreword.
Saying it out loud it sounds so obvious that it would be reasonable to ask why we hadn’t done this earlier. The answer to that is a combination of changed policy, shifting expectations and changes in working lives.
Both of our organisations were in existence prior to Pensions Freedoms, automatic enrolment, the emergence of scammers or the arrival of the digital age. We were created in a different age to deal with different issues. The notion – and acceptance – that we should develop a joint strategy is a reflection that both the TPR and FCA appreciate how much the landscape has shifted.
And so we launched our joint strategy last year. We identified a series of actions. Many were joint. Some fell specifically under the remit of the FCA, some under the remit of TPR.
We have taken particular responsibility for:
- automatic enrolment
- stronger regulation and engagement with investment consultants and fund managers
- increased focus on environmental, social and governance (ESG) factors in investment decisions
- the use of a broader range of regulatory interventions to address poor governance and administration, and
Each has particular relevance to savers:
- ensuring they get their proper entitlement from employers
- that ancillary actors are properly managed
- that financial issues related to environmental matters are properly considered
- that standards of governance are improved
The scope of the value for money element has increased following a request from the FCA to develop a metric to measure and TPR will progress this.
Similarly, we have agreed the scope for our work on consumer journeys. TPR be providing evidence to support four consumer journeys. In an attempt to identify the various factors that impact good outcomes.
TPR also took responsibility for proactive use of a broader range of regulatory interventions to address defined benefit (DB) funding.
This last point is relevant now, but as we look to the future its relevance will diminish. DB pensions are paying out, but if your work life began in the nineties or later, your future – and our focus – will increasingly be on defined contribution (DC) matters.
We have the resources in place to develop all the points I’ve just mentioned. We’ll be working with FCA colleagues to drive it forward.
I could, but I won’t describe to you the ways in which TPR has changed. Even since I joined. However, that’s a speech for another day and I dare say both we and the FCA could evidence ways in which we are plastic and evolving institutions.
What we share, and what remains immutable despite the ways we have both grown is the centrality of the saver. Whether they are looking to the FCA for financial guidance and clarity or to TPR for security in their retirement through their workplace pension.
Looking further ahead I think what the saver would really benefit from are connected systems. We need to find a way to weave together those areas of joint impact that would really be of benefit to them. Some invisible stitching to simplify the consumer journey. To make more appreciable the options available. To reduce the fear and anxiety in making plans that will affect the rest of their lives.
Many people feel overwhelmed by the options available to them. By the ‘freedoms’ that they can now enjoy. I think it’s our job to have them in mind. To make sure they are given the best advice, protected by appropriate regulation and kept well away from scammers.
Are we really saver focussed? Do we spend too much time looking inward? Trying to get our own systems to work? Are we stymied by our specialisms? Does the very nature of our work and the way we address it create complexity? Wouldn’t it be better to ensure that every time we introduce a new concept we check it’s not a duplication or parallel system?
If we place the saver at the centre of our work – might that help us better connect our systems?
If we can align and connect our philosophies, I think we can finally make some headway in finding a common language to address issues like adequacy. To really pick through the minefield of increases in automatic enrolment contributions. I mentioned a moment ago the increasing relevance of DC. Would a shared outlook help us mitigate against the ups and down of the UK economy? I’d like to think so. With all those DC investments liable to the vagaries of the wider economy I think it’s important for regulator to share a view. And a common goal.
What of those savers of the future? When it comes the pensions, dashboard will – almost inevitably – have been outpaced by app developers. What will the twenty-somethings of 2030 make of a state backed digital tool when they’ve been using their bespoke version for the preceding decade?
I’m not sure we even have the language to discuss this yet, but tomorrow is approaching fast. I want to make sure my child and your children are advised and protected however and whenever they begin to manage their finances.
I’d like to see a shared evidence base on which to base our joint aspirations. Clean, clear data from which both our organisations can benefit.
We need to be experts in our own fields. To be sure our advice is sound, our guidance is clear or that our regulatory approach is practical. What we don’t need to do is create systems or offer messages that are contradictory or confusing.
When I look at our Joint Strategy, what we have already achieved and what we have to do. I feel there are opportunities to align and connect systems. Sensible and practical ways to make our working lives simpler and more effective. I’m sure that was we make progress in each workstream these will emerge. We just need to make sure we recognise them and feel brave enough to make a positive change.
This event is ‘a year on’, twelve months since we set out our aspirations. It’s aimed at looking at what we have done or plan to do in the short term.
We’ve made a good start. I sense a genuine commitment and enthusiasm to make a difference.
At TPR we have resources in place to start putting meat on the bones. To build on the small steps made and start looking at the longer journey ahead.
My job is also to look further ahead. To consider the possibilities and unexpected benefits from bringing closer together organisations with parallel concerns.
We need to demonstrate our industry can adapt and collectively ensure regulation, guidance and advice is fit for purpose. To support the saver, to oversee the market and ensure we can innovate and respond at speed.
This is just the start of our working together. I encourage you to take this opportunity to speak with your counterparts and build some relationships. We have quite a journey to take and it will work better if we know and trust one another. I’ll be here all day if you’d like to talk anything over with me. Right now I have a panel to take part in, so I thank you for your time and look forward to some conversations later.