Asked by: Angela Eagle (Labour - Wallasey)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will make it his policy that Independent Governance Committees attached to contract-based workplace pensions have a duty to monitor the suitability of the retail fund choices available to scheme members.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Financial Conduct Authority (FCA) introduced rules in 2015 to require contract-based pension providers to set up independent governance committees (IGCs) to address poor consumer outcomes.
IGCs have a duty to scrutinise the value for money of the provider’s workplace personal pension schemes, taking into account transaction costs, raising concerns and making recommendations to the provider’s board as appropriate. IGCs have a duty to assess whether all the investment choices available, including default options, are suitable for the interests of consumers.
In 2016, the FCA reviewed IGCs and found that they were “generally effective” in influencing and advancing cost reductions for members. The review also found that the Independent Project Board’s work in auditing high legacy charges and implementing IGCs had been successful. As a result, a substantial majority of consumers received improved outcomes regarding costs and charges, with 1m consumers receiving reduced costs and charges.
The FCA has announced that it will undertake a further review of IGCs in 2019/20.
Asked by: Angela Eagle (Labour - Wallasey)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment his Department has made of the adequacy of scrutiny by Independent Governance Committees of the retail funds offered within workplace pensions products.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Financial Conduct Authority (FCA) introduced rules in 2015 to require contract-based pension providers to set up independent governance committees (IGCs) to address poor consumer outcomes.
IGCs have a duty to scrutinise the value for money of the provider’s workplace personal pension schemes, taking into account transaction costs, raising concerns and making recommendations to the provider’s board as appropriate. IGCs have a duty to assess whether all the investment choices available, including default options, are suitable for the interests of consumers.
In 2016, the FCA reviewed IGCs and found that they were “generally effective” in influencing and advancing cost reductions for members. The review also found that the Independent Project Board’s work in auditing high legacy charges and implementing IGCs had been successful. As a result, a substantial majority of consumers received improved outcomes regarding costs and charges, with 1m consumers receiving reduced costs and charges.
The FCA has announced that it will undertake a further review of IGCs in 2019/20.
Asked by: Angela Eagle (Labour - Wallasey)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if his Department will make an assessment of the potential conflict of interests in the business model of vertically integrated companies offering retail investment platforms, asset management and workplace pensions products.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
This is a matter for the Financial Conduct Authority (FCA), which is operationally independent from Government. The question has been passed on to the FCA. The FCA will reply directly to the Member by letter. A copy of the letter will be placed in the Library of the House.
Asked by: Angela Eagle (Labour - Wallasey)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will make it his policy for pension providers to produce standardised communications for charges on pension products for consumers.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
In June 2018, the Financial Conduct Authority (FCA) published its Retirement Outcomes Review final report. This two-year study assessed how the retirement income market has evolved following the introduction of pension freedoms. The review found that drawdown charges are complex, not consistent between providers, and can vary substantially across providers.
In response, the FCA is introducing a range of new measures, including a requirement for consumers entering drawdown to receive a first-year charge figure in pounds and pence terms. The FCA has also recently consulted on introducing a requirement for firms to provide annual information on costs and charges expressed in pounds and pence terms.
As the market is continuing to evolve, the FCA did not propose introducing a charge cap at this stage. The FCA expects the market to deliver competitive charges and is highly likely to move towards a cap if it does not.
The government welcomes the FCA’s work in this area, and stands ready to work with industry and the FCA to ensure consumer demands are being met, and any potential barriers to a thriving, competitive market can be addressed.
Asked by: Angela Eagle (Labour - Wallasey)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, if he will make it his policy to introduce a charging cap on the draw down of pension products.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
In June 2018, the Financial Conduct Authority (FCA) published its Retirement Outcomes Review final report. This two-year study assessed how the retirement income market has evolved following the introduction of pension freedoms. The review found that drawdown charges are complex, not consistent between providers, and can vary substantially across providers.
In response, the FCA is introducing a range of new measures, including a requirement for consumers entering drawdown to receive a first-year charge figure in pounds and pence terms. The FCA has also recently consulted on introducing a requirement for firms to provide annual information on costs and charges expressed in pounds and pence terms.
As the market is continuing to evolve, the FCA did not propose introducing a charge cap at this stage. The FCA expects the market to deliver competitive charges and is highly likely to move towards a cap if it does not.
The government welcomes the FCA’s work in this area, and stands ready to work with industry and the FCA to ensure consumer demands are being met, and any potential barriers to a thriving, competitive market can be addressed.
Asked by: Angela Eagle (Labour - Wallasey)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what recent assessment he has made of the ability of consumers to make an informed choice when accessing retirement income products.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government recognises that people need the right support and guidance to make decisions that best suit their evolving personal circumstances. That is why the Government introduced Pension Wise, a service provided by the Money and Pensions Service (MAPS) that offers everyone aged 50 and over who has a defined contribution pension, free and impartial guidance on their range of available choices at retirement.
The Financial Conduct Authority (FCA) found in its Retirement Outcomes Review in 2018 that consumer engagement in the retirement market is low and there are low levels of shopping around. As part of remedies to improve this, the FCA has set new requirements for pension providers to send more frequent ‘wake-up packs’ to their consumers, which include a summary of their open market options.
The Money Advice Service (provided by MAPS) also offers a guaranteed income product comparator tool and is developing a drawdown comparator tool, to make it easier for consumers to compare the different options available to them.
Asked by: Angela Eagle (Labour - Wallasey)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the adequacy of the regulatory and governance standards in the pensions industry in ensuring that drawdown products are appropriate for consumers.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Financial Conduct Authority (FCA) is the regulator of pensions decumulation products, including drawdown products.
The FCA conducted the Retirement Outcomes Review into the retirement income market, publishing the final report in 2018. The final report particularly focused on investment choices and charges in drawdown. As a result of its findings, it is introducing or consulting on a number of remedies to protect consumers from poor outcomes and promote competition in the market. These include the introduction of investment pathways and a requirement for consumers entering drawdown to receive clearer information on charges. The FCA is also currently consulting on extending the remit of Independent Governance Committees (IGCs) to investment pathways.
As the remedies will be a significant intervention in the drawdown market, the FCA plans to conduct a detailed review of the impact of investment pathways one year after implementation to consider how well the remedy is working.
Asked by: Angela Eagle (Labour - Wallasey)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how many people were placed in the higher tax threshold in each of the last 10 years.
Answered by Mel Stride - Secretary of State for Work and Pensions
The estimated number of taxpayers liable for tax at the higher rate are published in the HMRC National Statistics table 2.1, available here:Asked by: Angela Eagle (Labour - Wallasey)
Question to the HM Treasury:
To ask Mr Chancellor of the Exchequer, pursuant to the Answer of 2 July 2018 to Question 158173, if he will make it his Department's policy to require (a) banks and (b) other financial institutions to check for proof of power of attorney before that person is able to withdraw money from a dependant's bank account.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government believes that it is important that banks should identify their customers for their own commercial purposes and as part of the fight against financial crime. Each firm will have their own policies on identification, and Government does not prescribe those detailed policies.
However, my previous answer on 2 July 2018 referred to the Joint Money Laundering Steering Group (JMLSG) guidance notes, which have a formal status under the Money Laundering Regulations 2017. In relation to situations where a person deals with assets under a power of attorney, the guidance makes clear that that person is also a customer of the firm: consequently, the identity of holders of powers of attorney should be verified, in addition to that of the donor.
The Financial Conduct Authority (FCA) has the objective of protecting and enhancing the integrity of the UK financial system. The FCA use a risk-based approach to supervise retail banks’ compliance with the Money Laundering Regulations 2017, including their adherence to the requirements for customer identification. The FCA’s rules require that firms must maintain effective systems and controls to prevent the risk that they might be exploited by criminals or used to further financial crime. Where a firm’s systems and controls are not adequate, the FCA can and does take enforcement action.
Asked by: Angela Eagle (Labour - Wallasey)
Question to the HM Treasury:
To ask Mr Chancellor of the Exchequer, whether (a) banks and (b) other financial institutions are required to have proof of a power of attorney before that person is able to withdraw money from an dependant's bank account.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
There are no specific regulations which require financial institutions, including banks, to request proof of power of attorney before that person withdraws money from a dependent’s bank account.
However, the Money Laundering Regulations 2017 do require firms to identify and verify their customer’s identity when they establish a business relationship, for example, by opening a bank account. How firms verify their customers' identities is not stipulated in law or by the regulator. Firms are instead assisted in making such policies through industry produced guidance notes. For the financial institutions, these are the Joint Money Laundering Steering Group (JMLSG) guidance notes. This guidance requires firms to verify both the identity of the holder of the power of attorney and of the donor. Each firm will have their own policies on identification, and on the circumstances in which other checks should be undertaken.
The relevant guidance on power of attorney can be found in the JMLSG Guidance Notes, Part I, sections 5.3.99-5.3.101