View from City Road: Pensions may follow financial services

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One reason financial services regulation got into such a mess was that the legislation was the product of much lobbying by the financial industry and compromise by the Government. It was a classic committee job, and the result was a camel.

Now a proposal is on the table from the Goode Committee for new pensions legislation, and in particular a statutory regulator. The plan is straightforward, but the industry reaction is ominously similar to the debate over the Financial Services Act.

The National Association of Pension Funds yesterday described to the Commons social security committee its plans for an industry-wide code of good practice. Nine working groups have begun to draw up proposals across the whole range of pensions issues, Ron Amy, the NAPF chairman, told the committee, chaired by Frank Field.

Nobody could argue with the idea of a code of good practice, and Mr Amy rejected a suggestion that the codes were designed to be a replacement for the Goode proposals. But Mr Amy agreed that the codes could be regarded as a trial run, in the sense that the Government could look at them, see how they work and perhaps give some of them statutory backing. Clearly the NAPF has in the back of its mind that the codes could take the place of at least some of the legislation.

Mr Amy said proposals could be ready this autumn and the code could be in place two to three years earlier than a regulator. This has political appeal, not least because it reduces the pressure for legislation. The risk is that it will tempt the Government to agree another unsatisfactory hybrid between statutory and self-regulation like the Financial Services Act.