Pensions are attracting a lot of attention in the Channel Islands at the moment, with the Government of Jersey pledging to introduce a “phased, proportionate approach” to the regulation of private pensions by local providers.
The announcement comes barely a week after the Guernsey Financial Services Commission confirmed that changes to its pension transfer rules will come into force on 31 December.
Avoid over-burdening
The announcement from Jersey follows an initial consultation in November 2018 to establish if such regulation should be introduced.
It received “generally supportive responses”, the government said.
As such, it launched a further consultation to determine how the regulation would work in practice.
On 4 December, the Jersey Government said the proposed regulations will “focus on the specific risks in the Jersey market and seek to avoid over-burdening providers with onerous record keeping and reporting, so that it can remain cost-effective”.
State pensions are not affected by the proposed changes.
Constable Richard Buchanan, assistant minister for external relations, said: “Currently, pension providers are largely captured under other sections of our financial services legislation.
“This move will show further progress and allow a more focused and appropriate approach to ensuring all aspects of the Island’s financial services is captured by regulation.”
In stages
The government added that the introduction of the regulation would be phased, to allow providers time to prepare.
This will also allow time to assess the impact of each stage of regulation, it said.
In Phase 1, the government will focus on addressing the key consumer harms in the market, including high fees by service providers, a lack of transparency on fees imposed on members’ benefits, and unsuitable advice.
It will do this by introducing direct regulation for investment businesses service providers.
In Phase 2, the government proposes to extend the remit of the Channel Island Financial Service Ombudsman to include all private pension schemes to resolve current consumer barriers to making and resolving complaints in the local pension market.
This will equalise the standards required of lay and professional trustees and ensure a better service for members.
In Phase 3, the government will introduce pass legislation to regulate all local tax-approved pension products and service providers.
This will include providers in the retail and private markets.
