UK FCA issues statement on workplace savings schemes

The UK Financial Conduct Authority (FCA) has issued a statement alongside a press release aimed at clarifying the rules surrounding workplace savings schemes. These schemes, which allow employees to save directly from their salary via payroll, are seen as a tool to enhance financial resilience and support economic growth. Despite their potential, uptake remains low with only 7% of UK employers currently offering such schemes, largely due to perceived regulatory barriers. The statement is intended to provide reassurance that workplace savings schemes can be successfully set up and implemented to comply with existing rules and legislation.

The FCA specifically focuses on opt-in models, which some employers have already implemented within the existing legislative framework, as opt-out models likely require action from various authorities, including possible changes to legislation. The FCA provides clarity on: (i) compliance with national minimum wage regulations; (ii) whether employers are conducting regulated activities or making financial promotions. The FCA's view is that the schemes can be structured in a way that does not involve the employer carrying out a regulated activity, particularly where the funds are transferred to the savings provider rather than being retained by the employer. The FCA also provides guidance on how employers should communicate with consumers, to avoid breaching the financial promotion rules; and (iii) clarifying obligations under the Banking: Conduct of Business sourcebook, customer due diligence requirements, data protection laws and the Financial Services Compensation Scheme. The statement emphasises that savings providers in-scope of the consumer duty must comply with it to ensure good outcomes for consumers. The FCA confirms it will continue working with government bodies and industry stakeholders to promote wider adoption of workplace savings schemes so that consumers can start saving regularly.

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