The FCA has published Consultation Paper 14/16: Proposed rules for independent governance committees (CP14/16).
In CP14/16, the FCA sets out proposed rules that will require the providers of workplace personal pension schemes to set up and maintain independent governance committees (IGCs). The intention behind the IGCs is to have representatives that act independently of the firm and in the interests of the scheme members.
The FCA, the Department for Work and Pensions (DWP) and the Pensions Regulator (TPR) have all been working together to design a package of reform measures that will help ensure that all workplace pensions schemes are of high quality and offer value for money for the benefit of their members. The intention is to include new governance standards, a proposed charge cap on default funds, the banning of certain charging practices and measures to improve the disclosure of costs and charges.
The FCA also proposes that the key duties of IGCs, will consist of:
- acting in the interests of relevant policyholders;
- assessing the value for money of the firm’s workplace personal pension schemes;
- where the IGC finds problems with value for money, raising concerns (as it sees fit) with the firm’s board;
- escalating concerns to the FCA, alerting relevant scheme members and employers and making its concerns public; and
- producing an annual report of its findings.
CP14/16 will be of interest to:
- the providers of workplace personal pension schemes, including personal pension schemes and stakeholder pension schemes which employers either use for automatic enrolment or otherwise make available to their employees;
- consumers who have workplace personal pensions and consumer groups seeking better protection for consumers with workplace personal pensions;
- employers and their advisers, in relation to the selection and ongoing monitoring of workplace personal pension schemes; and
- fund managers and other third parties providing services to firms operating a workplace personal pension.
The deadline for responses on CP14/16 is 10 October 2014. Following feedback on CP14/16, the FCA will publish the new rules in a Policy Statement in January 2015. Subject to a further consultation the new rules will then come into force in April 2015, a date from which firms will be expected to comply.
View Press release: CP14/16 Proposed rules for independent governance committees, 6 August 2014
View Consultation Paper14/16: Proposed rules for independent governance committees, 6 August 2014