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Eversheds comment: UK FCA final rules may extend IGC requirements to individual personal pensions

  • United Kingdom

    04-02-2015

    Commenting on news that the Financial Conduct Authority has today published its final rules for independent governance committees, which providers of workplace personal pension schemes are required to establish by 6 April 2015, Francois Barker, Head of Pensions at law firm Eversheds, says:

    “One of the big issues coming out of the FCA’s final rules is mission creep. IGCs will be required to consider the position of all deferred members and not just those who become deferred from April. This is a big issue for some providers whose historic records do not distinguish between deferred members of workplace personal pension schemes and members of individual personal pension plans (which IGCs are not required to cover). These providers have two options, either they spend a lot of time and money trying to trace the relevant deferred members or they will be forced to extend their IGC to cover individual personal pension plans as well.

    “One of the big issues not addressed in the final rules is how IGCs should go about assessing value for money. This is new territory and there is no precedent for this. It is important that IGCs adopt a broadly consistent approach so that member protection does not vary wildly from provider to provider. To assist this, the FCA should move quickly to produce guidance for IGCs on the principles around assessing value for money and the approach they ought to take to this.

    “There is a significant amount of work that providers need to do between now and April to establish their IGCs. Most providers have appointed the Chair of their IGC and they are now in the process of appointing their other IGC members. However, there is a lot more that needs to be done, including, putting in place the legal infrastructure for IGCs, such as terms of reference and conflicts policies, provider’s upgrading their systems so that they can produce the data that IGCs will require and determining how the IGC will interact with the provider and its Board.”

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