Following our consultation in CP19/10, we are publishing our final rules and guidance on requiring pension scheme governance bodies to report costs and charges information to members of workplace pension schemes and some amendments to our COBS 19.8 rules, reflecting feedback to our Call for Input (CFI) – PRIIPs Regulation – initial experiences with the new requirements.
Why we are amending our rules
The Pensions Act 2014 placed a duty on the FCA to make rules for publishing and disclosing costs and charges information for the workplace pension schemes we regulate. Since 3 January 2018, our rules (in COBS 19.8) have required asset managers to report costs and charges information to the operator, trustee or manager of workplace pension schemes. This policy statement sets out our rules requiring scheme governance bodies to disclose this information to scheme members on an ongoing basis.
This policy statement also sets out some amendments to our COBS 19.8 rules. Those rules set out how asset managers must calculate transaction costs when reporting costs and charges information as detailed above. They mandate a calculation methodology similar to that used in the Packaged Retail and Insurance-based Investment Products (PRIIPs) regulation - known as the ‘slippage cost’ methodology. Some industry stakeholders expressed concerns about the slippage cost methodology, arguing that it can lead to potentially misleading information (such as negative transaction costs). To explore these concerns, we issued our Call for Input (CFI) PRIIPS Regulation – initial experiences with the new requirements on 26 July 2018. We have taken the feedback to the CFI on board (see FS19/1) and amended our rules as set out in this Policy Statement.
Who this applies to
This policy statement will apply to those who are involved in FCA-regulated relevant schemes in the defined contribution (DC) workplace pensions market. This includes:
- pension providers and asset managers
- the governance bodies of pension schemes, such as Independent Governance Committees (IGCs), and their advisers
- scheme members and their advisers and
- consumer representative groups
Firms will need to comply with the new rules from April 2020.