Aegon questions FCA’s proposed IGC changes

The Financial Conduct Authority’s (FCA) proposed changes to the role Independent Governance Committees (IGC) have in investment advice could cross the line into ‘executive’ responsibilities, Aegon has warned

In its response to the FCA’s consultation paper, Independent Governance Committees: extension of remit, Aegon argued that requiring IGC’s to have assessed investment pathways before they are offered to customers infringes on the role of the product provider and gives IGC’s too much executive power.

IGCs were set up in 2015 and currently provide independent oversight of the value for money of workplace personal pensions and oversee the pensions in the accumulation stage.

The FCA is proposing that IGCs should be required to offer investment pathways to non-advised consumers entering drawdown, similar to the remit of a drawdown provider.

Aegon pensions director, Steven Cameron, commented: “With investment pathways still a year off and with the final rules not yet published by the FCA, we remain unconvinced that IGCs have a necessary role to play in designing them or ensuring they offer value for money.

“We are concerned that the FCA proposals on investment pathways go beyond this and appear to cross the line into ‘executive’ responsibilities. Any requirement for IGCs to have assessed and effectively approved investment pathways before they are offered to customers, as well as on an ongoing basis, extends into product design.

“If IGCs are to be given a duty of challenging the value for money of investment pathways, it’s particularly important that the FCA sets out its expectations regarding pathways.”

In the FCA’s paper, it also proposed that IGCs should oversee their firm’s policies on environmental, social and governance issues, consumer concerns and stewardship.

Cameron concluded: “We do support the FCA’s other key proposal to extend the IGCs’ remit to consider environmental, social and governance issues as well as stewardship.

“The paper suggests ongoing work between the FCA and The Pensions Regulator could lead to more prescription on how to assess value for money.

“One of the main successes of IGCs has been their ability to tailor their assessment of value for money to their provider and customer base, so we must make sure any additional prescription doesn’t detract from this.”

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