Software snags hold up pension redress

Click to follow
The Independent Online
A central information library, touted by the Securities and Investments Board as a key part of the mechanism for giving redress to pension transfer victims, is barely working more than nine months after its launch.

Bacon & Woodrow, the firm responsible for setting up the library, with strong SIB backing, admitted yesterday that crucial software needed to speed up the reviews was not ready.

The delays mean hundreds of thousands of priority cases - deemed so because the policyholders have died, are close to retirement or were given particularly bad advice - will have to wait many more months, or even another year, until redress is offered.

Details of the new log-jam came as the SIB said yesterday that it was to launch yet another initiative aimed at overcoming the problem. The latest plan is believed to involve streamlining the information asked for by companies in a bid to improve response rates from policyholders.

The SIB's move is likely to meet with some scepticism from observers, who will point to its failure to deal with the Prudential, a company it regulates directly. Prudential has more than 40,000 priority cases. It has so far offered redress to just 10 of them.

A senior life company executive said yesterday the software problems in large measure explained the reluctance of Colette Bowe, chief executive at the Personal Investment Authority, to set new deadlines for compensating victims of the scandal.

In a PIA document obtained by the Independent, Ms Bowe says: "Fresh targets might simply provoke cynicism and downright disbelief."

A regulatory source said: "I feel sorry for [the PIA] really. They know the software is not there and won't be for a long while. But they can't admit it, because that would mean admitting people won't get redress for a long while yet, which is not the message they want to get out."

The library system was heavily promoted by Andrew Large, the SIB's chairman, in January, when he admitted that barely a handful of people who were mis-sold a pension had been compensated.

A pensions central library was to enable a database of occupational pension schemes to be built up. Scheme administrators would only have to provide information to one source, accessed in turn by any insurer paying a fee.

Andrew Winckler, SIB chief executive, told delegates at the National Association of Pension Funds conference in May that the City regulator "was clear that widespread use of a central library is one of the important keys to faster progress".

However, Ian Edwards, a partner at Bacon & Woodrow, said yesterday that four separate calculating systems were needed to meet the software requirements of the companies wanting to make use of the library.

So far one is operational, another is in the "final" stages of development, a third is now with the software supplier, while work on the fourth has not started.

Of the many dozens of companies who might use the library, some 20 are currently doing so, Mr Edwards said. "We are dependent on the software houses. It is taking far longer than initially assumed."

Comments