IGCs were set up in 2015 to challenge the value for money offered by providers to members of workplace personal pension schemes. The FCA is now extending their remit, which is a positive endorsement of their effectiveness to date.
Steven Cameron, Pensions Director at Aegon said: “With investment pathways going live in August, it was important that the FCA clarified the role of IGCs without further delay. Requiring IGCs to effectively endorse the value of the pathways ahead of launch is a new role for IGCs and comes close to an ‘executive’ role. Timescales are also tight.
“IGCs are now established in challenging providers on value for money for workplace pensions. This goes beyond charges to include assessing customer service, the quality and clarity of communications, investments and security.
“Investment pathways are a brand new concept, designed to provide those who go into drawdown without seeking advice a broadly appropriate investment strategy. A wide range of individuals with different attitudes to investment risk may opt for each of the four pathways, so the specific investment strategy can only ever represent a broad fit and can’t mirror individual attitude to investment risk. IGCs will need to build this into their value for money assessment.
“We support the FCA’s other key proposal to extend the IGCs’ remit to consider Environmental, Social and Governance issues as well as stewardship. This is a growing area of customer focus, and the input of the IGC will help ensure the industry delivers solutions in line with customer expectations.”
Laura Andrikopoulos, Head of Governance at Hymans Robertson reacts to the FCA’s policy statement on the remit of IGCs: “The FCA’s decision today to significantly widen the powers of IGC’s will be welcomed by many and is a strong step forward by the financial services regulator. High-quality governance oversight is crucial to the effectiveness of the UK pension system and extending the remit to pension providers’ approach to ESG recognises the increasing importance of this topic to pension members and society at large.
IGC’s which are managed well and confident in their powers are also crucial for maintaining value for money in relation to investment strategies in the post-retirement phase. If these powers are used well and respected, they could increase the extent to which IGCs are a real force for good. However, it’s important today’s move is not simply perceived as another layer of bureaucracy and that committees avoid becoming paralysed by attempting to take each members view on a wide range of issues into account.”
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