Denmark’s Financial Supervisory Authority (Finanstilsynet, FSA) has taken AkademikerPension to task for failing to make sure its pension products meet customer needs, ordering it to correct procedures, but the pension fund has mostly rejected the watchdog’s points.
The watchdog published its account of failings at AkademikerPension alongside a broader warning to the Danish pension sector to make sure they continuously monitor all products, including old ones not covered by the new rules for product oversight and governance (POG).
The FSA said it had focused heavily in recent years on pension firms testing and monitoring products in accordance with the POG rules, which took effect in 2018, covering products developed or significantly changed since that year.
The POG rules originate from the European Commission’s 2016/97 Insurance Distribution Directive, and subsequent amendments.
However, Ulla Brøns Petersen, head of the authority’s consumer division, said: “If a product has not been significantly changed in the last seven years, it may simply have been allowed to continue to exist without the pension companies having actively dealt with them.”
“But companies have an obligation to continuously ensure that all their products are up-to-date and provide good results for customers. This follows from the rules on good practice,” she said.
After reviewing AkademikerPension’s product approval processes, the FSA said it assessed that the pension fund has not carried out sufficient coverage of the needs, characteristics and goals of the target group in connection with the development of the new products collectively offered under the AlfaPension name.
Neither had the pension fund continuously ensured products outside the scope of the POG rules were up-to-date and met needs, the FSA said.
“The crucial thing is that the products offered are clearly defined and that the product features are based on a well-documented basis, where the needs, characteristics and goals of the target group are included in the product development,” the FSA said in its statement to the pension fund, published yesterday.
AkademikerPension responded by defending itself against the watchdog’s censure, while saying in the statement on its website that it always acknowledged orders and criticisms made by the Danish FSA.
“However, it is our assessment that AlfaPension ensures that our members have a flexible and good product that supports different types of family, and that each member can adapt the scheme to their individual needs,” the DKK157bn (€21bn) pension fund said.
It added that it had continuously surveyed members and held events aiming to get to know their needs and preferences, so the products had been continuously adapted to their needs over the years.
“The criticism from the Danish Financial Supervisory Authority is that we have too little documentation that AlfaPension and our other products meet the members’ needs,” it noted.
The pension fund said it was already working to ensure it could be documented that the products met requirements, and would continue to monitor and test them.
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