Colin Musgreaves raises concerns over the complexities of new regulations and asks, who will explain?
Thanks to a 22 year old boy racer not looking where he was going, I am the proud but involuntary owner of a brand new car.
For the past month I have had hours of fun randomly pressing buttons, but yesterday, when opening a previously unopened compartment on the passenger side, I discovered an object of horror and mystery in a black leather case, an instruction manual!
Like most men, I have absolutely no intention of reading any of its content. It consists of four separate parts and a ton of paper. I am determined to ignore it, you don't have to be an actuary to work out how to change gear in an automatic car.
Anyway, a chap at the dealership has read the manuals and told me how things work - that's what he gets paid to do and it makes life a lot easier.
But is it really as easy as that and will I be safe?
When pension fund Trustees start to ask for the full details of transaction costs (as required by the Occupational Pension Schemes (Charges and Governance) Regulations 2015 and as outlined in the FCA Call for Evidence Paper March 2015) how will they work out what they mean and if they offer good value for scheme members?
Is reading the manual enough or would it be useful to have a 'chap' to translate it as an additional safeguard? And who will pay?
The considerations, options, possibilities and outcomes are all detailed in the FCA Paper, which runs into 55 pages. It could result in Fund Managers having to issue terabytes of data to every set of Trustees who ask for it, every year. How will they do it, who will pay and what are the dangers of sensitive and confidential information falling into the wrong hands?
What will happen if numerous queries follow?
Is a brief read of a complex manual enough? Will it include full details of explicit and implicit costs and who is willing to be responsible if the analysis is not done properly or even, at worst, ignored??
Also, how will Trustees be able to compare the costs without full knowledge of the market, is there another manual for that?
Perhaps we all need a 'chap' every now and again to explain how things work and make our lives a little easier.
Employers, fund managers and trustees should not be afraid to ask for help to make their drive as safe as possible.
First published in Pension Funds Online, 07 August 2015