Last week saw the long-awaited Pensions Dashboards feasibility study finally being published by the Department of Work and Pensions. This is a huge step forward and one that reflects the perseverance of a forward-thinking Pensions Minister like Guy Opperman.
DWP says the Pensions Dashboard feasibility study will be released "shortly". pic.twitter.com/SGSfk3GdBn— Josephine Cumbo (@JosephineCumbo) September 26, 2018
While the study has many positives, there are also some critical flaws in the proposed implementation. This is the first in a series of three PensionBee blog articles that will address our main concerns in the study as it stands. Specifically, I will be writing about the unnecessary delays to commercial dashboards; Jonathan Lister Parsons, Chief Technology Officer, will be writing about the proposed technological infrastructure and Clare Reilly, Head of Corporate Development, will be writing about governance.
Our feedback is informed from our own experience in helping thousands of customers to find and combine their pensions (effectively providing dashboard functionality to the market) as well as our market-leading position in integrating with five open banking applications and thereby setting the standard for “open pensions”. Since our inception, we have focused on delivering the best possible outcomes for consumers and we believe pension dashboards, if done correctly, can make a real difference.
So let’s start with the unnecessary delay to commercial dashboards.
Laying out the government’s approach
The government is on board to create multiple dashboards, noting that “the Department recognises the potential for industry (for example, financial services including pension providers, and new FinTech providers) to find new ways of engaging and supporting individuals, in a way that a single, non-commercial dashboard may not.” The report goes on to say that “in order to harness innovation and maximise consumer engagement, an open standards approach that allows for multiple dashboards is the right way forward.”
However, DWP also notes that “the evidence would suggest that starting with a single, non-commercial dashboard, hosted by the Single Financial Guidance Body (SFGB), is likely to reduce the potential for confusion and help to establish consumer trust”.
I will now explore the three reasons why this approach is suboptimal and actually undermines the government’s objectives to 1) obtain sufficient data coverage 2) meet the 2019 deadline 3) protect consumers and 4) ultimately help consumers engage with their pensions.
A voluntary initiative needs a commercial incentive
Because “there is absolutely nothing going on in government”, as DWP often tell us, the Department has taken the decision to get going with the Pensions Dashboards on a voluntary basis rather than by compulsion, which would require legislation. This means that providers are expected to pay for the Pensions Dashboards and provide their data out of the goodness of their hearts. Undoubtedly some will, because it’s the right thing to do, but many won’t without the opportunity to benefit commercially.
Pensions Dashboards will create winners and losers: the winners will benefit from increased pension consolidation into their products. The losers will face an exodus. If we want to start with a voluntary initiative, then there needs to be a quid pro quo for those who provide their data to also reap the commercial benefit of data sharing. So far, no major provider has put its hand up to voluntary data provision. If there is no commercial benefit, the voluntary group is likely to be too small to matter.
Delays, delays and more delays
It has been argued that the phased approach - because it seems smaller in scope - will enable the industry to release a working concept by 2019. After all, how hard could it be to launch a single dashboard? The answer is: pretty hard. Because this dashboard will be the “official version”, it will inevitably become bogged down in all of the questions that have plagued the Pensions Dashboards project and that still remain unresolved, such as: how many providers are enough? what is the minimum viable product? Answering these questions to the satisfaction of the industry (or at least the initial group of voluntary data givers who will have diverse interests) will take time and there is a substantial risk that nothing gets out the door.
It is unclear to me if anyone has actually done the math on what it would take to get a voluntary Pensions Dashboards shipped from a timing perspective. The SFGB will begin work in January 2019. If it begins working on the dashboard immediately, we would expect it to have a governance committee in place at the earliest by April 2019. The committee would then need to design the standards, which would realistically take at least another 8 months. Only once the standards are in place will the voluntary data givers truly be able to prepare to give data (cleansing, validation, opening APIs, testing) - this will take at least 12 months...so that brings us to 2021. Maybe. Then we would need to do consumer testing and answer all of the difficult questions above.
If it were made clear that commercial dashboards could launch at any time, there would be an incentive for providers to push the project forward and sufficient tension for the “official version” to get on with it or risk being left behind.
No such thing as private data on a public dashboard
I disagree that commercial dashboards will necessarily endanger consumer interests. After all, it is proposed that commercial dashboards are regulated entities that would presumably require authorisation and supervision.
The consumer ultimately owns the data on the dashboard. And therefore the consumer has the right to share this data with whomever they wish. In the period between when the “official version” is live and the first regulated commercial dashboard is available, anyone who can convince the consumer to give them access to the data will be able to get their hands on the consumer’s “official dashboard” data. The lowest form of technology to do this with is a screenshot, but we expect many scraping services to pop up. The DWP has said that “commercial dashboards should not be available to users until the appropriate regulatory framework is in place”, but it is unclear what mechanisms will prevent rogue dashboards from appearing in the period between when the “official version” is launched and commercial dashboards are formally regulated. The feasibility study has said that “information and functionality will be covered by existing regulation”, so why not lead with this approach? To protect consumers, we should make it clear that only regulated entities can operate dashboards and should be allowed to access a consumer’s data at any time; alternatively we could find ourselves confronted with the data scandal of our time.
Consumer engagement: a distant fantasy?
Ultimately delaying commercial dashboards means delaying the full potential of consumer engagement with their pensions. It is expected that the “official Pensions Dashboards” will not (and could not) meet the diverse requirements of 15 million pension owners. The official dashboard will primarily be used as a tool to find old pensions and only the commercial sector can truly deliver the innovation consumers need and deserve in pensions, such as saving round-ups, dynamic outcome calculators and asset aggregation. These are the tools that are needed to get consumers to understand their pensions more and ultimately to save. Attempting to delay commercial dashboards means we would delay - or even fail to deliver - all the good things dashboards are expected to do.
It has been argued that the phased approach will make at least one dashboard more deliverable by 2019. However, in the next post by Jonathan Lister Parsons, Chief Technology Officer of PensionBee, we will discuss why an open standards technological infrastructure would be the optimal approach to allow commercial dashboards to launch at the same time as an “official dashboard”.