Consumers look forward to ‘digital engagement’ with their pension providers as the FCA’s Consumer Duty goes live this summer
6 Feb 2023
Leading pensions fintech Dunstan Thomas predicts that consumers approaching retirement will see a significant rise in email and postal invitations to interact online from their pensions product providers within the next few months. This rise in digital interactivity, via retirement planning portals and platforms, is being stimulated by the financial regulator’s new Consumer Duty requirements which go live for existing pension policyholders from the end of July.
FCA Consumer Duty
The FCA’s Consumer Duty demands that financial product providers test whether the holders of their products really understand their features, benefits, charges and risks. The new Duty will also ensure that pension providers and platforms are being selected by the right target groups which they were designed for. The Duty insists that product providers check that their products are delivering what their customers are looking to achieve - alerting them if they are off track.
Providers will even have to develop online comparison tools to ensure that their customers are getting value for money. These tools will be built using a number of streams of data including the amount saved so far, current monthly contribution amounts, the likely impact of savings from costs and charges and possibly even the customers’ plans for use of their pension savings when they finally retire.
Adrian Boulding, Director of Retirement Strategy at Dunstan Thomas said:
“Consumers are used to providing their personal data to product and service providers to help them tune their offering to their needs. This is exactly the sort of thing pension and other financial product providers will need to stimulate now. If they haven’t gathered all this data yet, they need to start doing that fast – bringing it all right up to date before the Duty goes live. They will have to encourage their customers to volunteer it by offering them online guidance and prompts in return - all within slick new digital customer journeys which are smartphone as well as PC-friendly.”
Retirement Planning Tools
Dunstan Thomas predicts that providers will need to get their policyholders to state what their retirement plans are. If it looks like the answers they are giving don’t make sense or indicate poor understanding they may need to step in to fill comprehension gaps or encourage them to take financial advice. Providers will need to build these digital customer journeys and get ready to head policyholders away from making poor choices which may leave them badly off in retirement.
Adrian Boulding of Dunstan Thomas added:
“The new Consumer Duty heralds a new era of much more engaging messages about pensions. Pension companies will need consumers to respond to them and they will only do that if they are enjoying the experience.
So, it will be out with the old dreary tomes of information and in with new ways of learning about pensions that savers actually want to respond to. Technology will be key to changing pensions from dull and opaque, to bright and clear.”
Dunstan Thomas has published a White Paper on the new Consumer Duty written for pension providers, platforms and financial advisers who will be subject to the new regulation from 31st July 2023.
Later this year, Dunstan Thomas will commission independent consumer research of those already in retirement to ascertain the level of need for the sorts of ‘digital intervention services’ described above, to ensure the best possible outcomes for policyholders preparing to retire.
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