In his latest monthly installment, the CII's David Thomson provides an update on the key regulatory events of the past few weeks...
NEST research on auto-enrolment
The publication of the second edition of NEST Insight is one of the key recent regulatory events. This is the annual snapshot of the auto-enrolment landscape, which looks at the behaviours and attitudes of members newly enrolled into workplace pensions, and employer and employee reactions to its first year.
One area of the investigation was the readiness of advisers to support employers in preparing for auto-enrolment. The results found 82% of advisers with a significant proportion of clients staging in 2014 have identified ways to help their clients adjust to the reforms on an ongoing basis.
Alongside this, the research also found that nine out of ten employers with more than 50 workers plan to seek advice on the choice of their scheme.
Cap on pension charges delayed
In a related development, pensions minister Steve Webb recently spoke at the Confederation of British Industry's pensions conference. Following this speech, it was confirmed that there will be a delay to the implementation of the cap on default pension scheme charges.
The cap was expected to be enforced this April to make the system fairer for consumers. This has now been pushed back to April 2015, following pressure from pension companies. It will also allow employers more time to prepare for auto-enrolment and to prevent disruption for those enrolling.
Although this decision will benefit employers, it has resulted in disappointment from savers. Labour has criticised the decision, branding it "another example of [the government's] failure to stand up for interests of savers".
Consumer Rights Bill
Meanwhile, the biggest change to consumer rights in a generation is now underway, with the introduction of the Consumer Rights Bill. This Bill has begun its passage through parliament and aims to make customers better informed and better protected when they are buying goods. This will include clarification of the standards a consumer can expect when they buy something and ensure they have clear paths to redress and are aware of their rights.
It intends to do this by bringing together, and improving and updating, consumer law by setting out a simple, modern framework of consumer rights, as well as simplifying enforcement powers and making it easier to tackle rogue traders and those who break competition laws.
The Bill is another stage of the government's consumer strategy for 'Better choices: Better deals – Consumers powering growth' and demonstrates how it is taking the improvement of consumer rights seriously.
Finalised guidance on inducements
Earlier this year, and as part of the ongoing thematic review into the implementation of the Retail Distribution Review (RDR), the Financial Conduct Authority (FCA) published a further regulation update with the finalised guidance on inducements for product providers and advisory firms. This is intended to help firms interpret the existing inducements and conflict rules.
The guidance makes clear that financial services and product providers share the responsibility of managing potential conflicts of interests when receiving and making payments under service and distribution agreements.
The guidance was devised following a thematic review that found payments were still being made that could result in advisory firms favouring one product provider over another, undermining the aims of the RDR. Firms are expected to review and, if necessary, revise their existing agreement within three months of its publication.
FCA on transition management firms
The FCA has also published its report into the transition management industry. This outlined the areas in which transition managers have failed clients and where it expects firms to improve.
The findings of the report show firms broadly met the regulator's requirements. The sector is responsible for the transfer of more than £165bn of assets invested in pensions and other large funds between investment managers, markets and products annually.
However, the review did point out that the quality and effectiveness of controls, marketing materials, governance and transparency varied across firms and recommended they need to meet all the requirements of the FCA.
The regulator plans to focus on the following areas in its dealing with firms: managing conflicts of interest, oversight, governance and controls at transition management firms, transparency and communication, and client understanding.
To read last month's round-up CLICK HERE
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till