Pension Schemes Bill (Eighth sitting)

Rebecca Smith Excerpts

Committee stage
Thursday 11th September 2025 Public Bill Committees

[Kirsty Blackman]

Mr Speaker and previous Speakers have encouraged us as Members not to worry about repetition. Generally, the more we can talk about and highlight issues the better. Part of the point of the new clause is to ensure that the Minister recognises and says from the Front Bench that this is an important issue. Whether or not there is an actual consultation taking place, if we can have that commitment—we will probably ask him for that commitment again and again, given the nature of this place—we would be very happy to receive it.

I agree with the hon. Member for Horsham that the balance is really important. When it comes to guided retirement products, it is key that companies do not worry that the privacy and electronic communications regulations, or any legislation, is going to get in the way of proper communications, but that people are also protected from potential scam communications, and that we are able to crack down on anyone undertaking scams and looking to take significant amounts of money—these are the largest amounts of savings that the vast majority of us will ever have in our lives.

[Rebecca Smith (South West Devon) (Con)]

I have a query off the back of the comments of the hon. Member for Aberdeen North.

We heard in the evidence sessions that there is a danger that overdoing the requirements for marketing will get in the way of providing guidance. That came up directly in the response to some of our questions, I think specifically from Legal and General and Aviva. Companies are already in a position where, if they are not careful, offering guidance is considered marketing. Therefore, they do have their hands tied by existing legislation.

I am slightly intrigued why this new clause has been tabled, given that Liberal Democrat colleagues will have also heard that evidence. More work is needed on this issue than just adding a new clause to the Bill; I heard from the hon. Member for Hendon that there is a consultation.

Although I understand the point about protecting vulnerable customers from scamming, I feel the evidence we heard demonstrates that more work is needed, work that is not included in the Bill, to make sure that pension companies are able to advertise in such a way that they can play their part in the guidance process that we have debated at length, and in how people get that financial education.

I understand the premise of the new clause, but we have many more questions to answer on this. If anything, I think we need to be making it easier for pension companies, the legitimate people in the room, to be able to communicate. There could be unintended consequential issues; we are trying to deal with scammers, but we might inadvertently stop people accessing information that we are trying to help them to receive.

[Torsten Bell]

Let me attempt to offer some words of clarification and then come to what the Government are doing on this issue.

To clarify, pension schemes are covered by the rules on direct marketing already. I think the new clause as drafted would probably have the opposite effect to what the hon. Member for Horsham intends, by carving out pension schemes from the limitations on direct marketing. That would be a loosening of the direct marketing restrictions for pension schemes. There are people in the industry that have been calling for exactly that, so that may be where the new clause is coming from, but I clarify that they are covered; the direct marketing rules prevent pension schemes from behaving in those kinds of ways.

What is the context here? We are obviously aware of concerns that the existing direct marketing rules, which apply to pension schemes, may limit providers’ ability to deliver the new targeted support regime that is being developed by the Government, exactly as the hon. Member for South West Devon has just set out. Under targeted support, FCA-authorised firms will be able to proactively suggest appropriate products or courses of action to customers. That could help people to make decisions about access to their pension, but it obviously needs to be done in the right way.

We have heard the feedback from stakeholders on the interaction between that wish for targeted support and direct marketing rules, which is where most of the debate on this area has been. Because targeted support involves recommending specific courses of action, it could be considered direct marketing. That is the cause of the tension.

There are particular issues for pension providers who administer auto-enrolled members, where the individual has not chosen the pension scheme or engaged with them. As a result of that, they cannot generally satisfy the requirements of what is called the soft opt-in, because the provider has not collected the information from the individual at the point at which they were enrolled—it has gone through the employer.

What are we doing about that? We are examining quite a range of policy options at the moment. That includes legislative change, which can probably be done via secondary legislation. I think that is the right way for us to proceed. When we do that, we need to get the balance between enabling targeted support and making sure that we do not have inappropriate direct marketing within the pension space. I definitely would not want to see a carve-out from all direct marketing rules for the pension sector as a whole, as there are risks that come with that. I hope that gives Members some clarity and an explanation of what the Government are doing to take this issue forward.