The FCA is consulting on proposals to extend the remit of Independent Governance Committees (IGCs).
The FCA proposes that IGCs, which provide independent oversight of the value for money offered by workplace personal pensions during the accumulation phase, become subject to two new duties:
- A duty to report on their firm’s policies on environmental, social and governance (ESG) issues, consumer concerns and stewardship, for the products that the IGC oversees. FCA guidance will be issued to help providers of pension products and investment-based life insurance products to consider factors that can have an impact on financial returns (such as ESG risks and opportunities) and factors that can have an impact on non-financial consumer concerns, when making investment decisions on behalf of consumers.
- A duty to oversee the value for money of their firm’s investment pathway solutions. This would require assessing the costs and charges of pathway solutions relative to their quality, and the appropriateness of a pathway solution for consumers invested in it. IGCs will have the power to raise any concerns directly with the board of the firm, which in turn will be required to respond to the concerns raised.The FCA also comments on published IGC annual reports and on its engagement with IGCs. Separately, it invites views on its planned work with the Pensions Regulator on value for money in pensions.
The consultation closes on 15 July 2019 and the FCA intends to publish its finalised Handbook text in a Policy Statement in the fourth quarter of 2019.