UK pensions minister rejects calls for single regulator

The new UK pensions minister has dismissed calls for a single pensions regulator merging the responsibilities of the Financial Conduct Authority (FCA) with those of the Pensions Regulator (TPR).

Ros Altmann argued that it was more important that the government focus on auto-enrolment and new freedoms to draw down pension pots from 55 rather than reorganise the regulatory landscape as demanded by parliamentarians and the industry.

Altmann, successor to Steve Webb following May’s election, was responding to a report by the parliamentary committee on work and pensions from March.

The report called for a merger of regulators and the establishment of an independent commission charged with reviewing defined contribution (DC) charges and auto-enrolment.

The minister also welcomed calls for greater fee transparency, and noted that a consultation would be forthcoming on whether to incorporate transaction costs within the current 0.75% charge cap imposed on auto-enrolment default funds since April.

Asked about the creation of a single regulatory authority for pension funds, Altmann said it was important to first focus on auto-enrolment.

Her response continues the previous coalition government’s stance that it would not reorganise the regulatory environment, which was overhauled in 2013 with the closure of the Financial Services Authority, with responsibilities split between the FCA and the Prudential Regulation Authority. 

Webb previously said the proposed changes were not being examined, but he faced pressure from the National Association of Pension Funds, which argued that the current arrangement was “unsustainable” in light of auto-enrolment.

The National Audit Office had also called for the establishment of a single regulator.

In a separate response, the FCA deflected questions about an overhaul, saying the creation of a single regulator was a matter for the government.

But it defended its track record.

It added: “Any attempt to separate the regulation of financial services products will inevitably result in distinctions being drawn at some point in the regulatory landscape and potentially substituting one boundary for another.”