The City watchdog is being pressed to adapt its rules on product disclosure to help savers accessing pension information via smartphones.
Some of the UK’s biggest insurers have met the Financial Conduct Authority to discuss ways in which key information, such as contract terms and conditions, can be recrafted for digital customers.
Currently, insurers must abide by rules surrounding what information should be disclosed to customers, including terms and conditions, and what format it should take.
But Scottish Widows, the pension provider, said these rules were drafted for a paper-based era and are ill-suited to customers using smartphones to access information.
“When we talk to millennials, it is no surprise that they want to digest information in bite-size chunks,” said David Holton, director of corporate propositions at Scottish Widows, which is part of Lloyds Banking Group.
“But the challenge for us is how we communicate this information to consumers. We have been talking to the regulator about better ways to display information for customers, such as those using mobile phones.”
Lloyds has already changed the way its digital customers receive product information, with terms and conditions offered in video, rather than paper, format. “Customers don’t want reams and reams of paper,” said Mr Holton.
“We think technology could be a game changer for pensions so I think the issue of how to make the rules more digital friendly needs to be a priority for the regulator.”
The Association of British Insurers said there were are a number of mandatory requirements for providers to disclose information, with regulation at a national and European level, which could prove “challenging” for smartphones and other digital devices.
“We continue to discuss disclosure requirements with regulators and government to secure a proportionate approach that meets consumers’ expectations,” said James Bridge, ABI head of conduct regulation.
“Providers need to innovate to ensure they can improve customer service in an increasingly digital world.”
The development comes as insurers are spending tens of millions on technical innovations for their pension propositions, including plans to offer customers access to their accounts via mobile phone apps, and fingerprint security access.
Aviva, a leading UK pension provider, has said that pensions need to be brought out of the “stone age” and is spending £100m on a “digital first” strategy, including offering its customers more tools to manage their retirement savings online.
The FCA last year published a discussion paper on how information can be delivered to consumers in “smarter, more effective ways”. This included adopting innovative techniques as “we move away from the paper-based mindset,” said the regulator.
Presentation of contract terms and conditions, disclosure of costs and charges were identified as areas for improvement, along with simplifying information given to consumers at retirement.
“Communications play a fundamental role in helping consumers to make informed decisions,” said the FCA in its discussion paper.
“Effective, engaging information can be a key tool in promoting effective competition to supply products and services that consumers want. Greater transparency in firms’ communications with consumers can also lead to greater efficiency for the industry, with less time spent handling complaints.”
The FCA said it expected to publish the response to its discussion paper shortly.
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