Since the concept of the pensions dashboard was first raised in 2015, it has attracted a great deal of interest from the adviser community. Now the Association of British Insurers (ABI) has published its recommendations for the dashboard, the question is whether it is going to be a dream come true for consumers and advisers. Or an unachievable nightmare for those tasked with pulling the data together.
With the system due to go live in 2019, here are four big questions people are asking about the dashboard:
* What are the potential stumbling blocks for the dashboard?
In common with the ABI, we believe it is absolutely essential all pension providers are required to submit information for the dashboard. State pensions need to be included, which means government buy-in to this initiative is vital.
While a pension dashboard working in the way it is intended to work will be hugely beneficial for advisers and consumers, a dashboard without all the relevant information could be more detrimental to consumers than nothing at all.
* Is the industry ready for the dashboard?
Yes, the industry is more than ready for the dashboard … in theory. A dashboard will pull verified information into one central hub and should be much easier for both clients and advisers – however, the challenge will come from whether the providers that hold the data and the ABI, which has bravely taken on ownership of the technical logistics of the dashboard, are ready for the enormity of the job in hand.
Although a lot of work has gone into the processes behind the dashboard and running test data, data protection regulation has so far prevented any dry-runs with real, live data. The algorithms behind the dashboard will need to draw together a great deal of complex and far-reaching data and it is absolutely essential consumer trust in the accuracy of the system is maintained.
In other words, while the industry is more than ready for the dashboard, it is just as vital the dashboard is 100% ready for the industry before launch in 2019.
* Is there a danger this could detract from advice?
We believe the opposite is true – if anything, the pensions dashboard should signpost consumers towards advice. Research by the Department for Work and Pensions has shown that individuals have an average of 11 different jobs in their working lifetime, which could potentially mean an average of 11 different pension pots.
The dashboard does not offer advice – it merely pulls together data from a range of sources, so it undertakes an administrative task that is, frankly, a waste of an adviser’s time. This freed-up time can then be spent with clients, concentrating on services we know they genuinely value, and helping them to plan their financial future holistically.
Although the pensions dashboard seems unlikely to have as big an impact as pension freedom, discovering a forgotten pension pot or two should be a perfect motivator for consumers to seek out an expert for further guidance on their financial affairs.
* What are the pros and cons of the dashboard?
The pros of a pension dashboard are clear for both advisers and clients – an individual’s pension pot details all available in one place and accessible at the touch of a button. The amount of time and confusion this will remove from the pension advice process is significant.
There remain, however, potential concerns around data protection and the ability of the dashboard to immediately deliver all it promises. We have extremely high hopes for the dashboard – but consumer confidence in the financial services sector is still tenuous and may not survive another unfulfilled promise.
Liz Coyle is compliance policy manager at The SimplyBiz Group
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