New rules under consideration by the FCA will put Pensions Dashboard providers in a “prime position in the dash for DC cash”, according to former pensions minister Steve Webb.
The FCA is currently consulting on the regulatory framework for Pensions Dashboard Service Firms.
According to LCP partner Steve Webb, examination of the plans, which were revealed last week, that they could give a huge advantage to DC consolidators who set up their own dashboards.
In the pilot phase the Pensions Dashboards Programme has announced three trial providers – an insurer (Aviva), an open banking platform (Bud) and an open data fintech (Moneyhub) – but it is expected that a wide range of market participants will choose to offer a Pensions Dashboard.
One key feature of Pensions Dashboards will be the ability of users to export their data.
Mr Webb said: “Although dashboard providers may choose not to offer this facility, it seems highly likely that many will offer the user the ability to download their own data and also to export the data to a provider’s site.”
The FCA consultation said that although this raises potential risks, there would be problems if users could not export their own data. However, the rules propose that there would only be two places where the user could export their data, to themselves or to the dashboard provider (or firms in the same group).
Mr Webb said: “Given the large number of fragmented pension pots, not least since the advent of automatic enrolment, it is widely expected that one consequence of the launch of Pensions Dashboards is that individuals will be prompted to consolidate their DC pensions with a single provider.
“But if the only direct way in which consumer data can be exported to a provider is if they operate a Pensions Dashboard, this will put such providers at a head start when it comes to ‘harvesting’ DC pots.”
He warned it could put dashboard providers in prime position compared with other consolidators who would have to get users to download data – possibly from a rival’s dashboard – and then re-upload it to a different site.
He said: “We are very likely to see a ‘dash for DC cash’ when dashboards go live, and the restrictions on data export mean providers who set up their own dashboard are likely to be the winners of that race.”
