On 9 November the FSA published a consultation paper CP10/26 entitled ‘Pension reform – Conduct of business changes’ regarding proposed changes to the Conduct of Business Sourcebook (COBS) resulting from the Government’s reforms to workplace pensions. From October 2012, employers will be required automatically to enrol their eligible employees into contributory pension schemes which may be occupational pension schemes (including the National Employment Savings Trust set up by the Government) or group personal pension (GPP) schemes that meet the criteria set out in the Pensions Act 2008.
The changes to COBS proposed by the FSA seek to achieve two main objectives:
- to ensure that the interaction between COBS and the legislation proposed by the Department for Work and Pensions does not present unnecessary barriers to employers using GPPs for automatic enrolment; and
- to ensure that consumers remain adequately protected.
The FSA’s proposals can be divided into two categories:
- proposals to ensure that GPPs may be used effectively for automatic enrolment and to protect employees in the automatic enrolment and opt-out processes including, for example, clarification that automatic enrolment does not fall within the scope of the Distance Marketing Directive; and
- proposals relating to the protection of consumers against the relevant risks that arise once the pension reforms come into force including, for example, the extension of additional requirements for recommendations in connection with additional contributions to GPPs.
The deadline for comments on this consultation is 9 February 2011. The FSA expects to publish a policy statement with the final Handbook text in Q2 of 2011 and the implementation date for the changes resulting from this consultation will be 1 October 2012 (the date on which the workplace pension reform legislation is expected to come into force).
Copies of the CP10/26; related newsletter; related press release; and related webpage are available online.