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Guide for Employers and Trustees on
providing support with financial matters
without needing to be subject to regulation
September 2017
Introduction
As an employer or pension trustee, you might wish to help your employees with financial matters.
However, you might not be sure about what you can do, without needing to be authorised by the
Financial Conduct Authority.
This factsheet gives some information on the things you can do without the need to be authorised.
It does not give an exhaustive summary of all the relevant legislation; however, we have signposted
other resources that you might find helpful in understanding the sorts of things that you might offer
employees.
Authorisation
Where an employer or trustee is thinking about helping their employees with their workplace pension
scheme, or other aspects of their financial affairs, they will generally not need to be authorised by the
FCA.
An employer or trustee will only need authorisation from the FCA if they are in the business of
providing investment advice and if they receive a ‘commercial benefit’ for helping their employees. A
‘commercial benefit’ could take a number of forms but the most obvious would be where the provider
of a financial product offers the employer commission or a reduction in their commercial insurance
premiums. Where a firm’s pension and benefits package results in a more motivated or productive
workforce we would not regard this as a commercial benefit that would trigger the requirement for the
firm to be FCA authorised.
Employers and trustees are not generally in the business of giving investment advice and do not
normally receive any commercial benefit for giving advice to, or helping their employees with pensions
or other financial matters. So in most cases employers should be able to help their staff without
needing to be authorised.
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Promoting Pensions
The most likely area where employees are likely to turn to their employers or pension trustees for help
is, of course, with their pension.
In general, any material that promotes a particular financial product needs to be issued by someone
authorised by the FCA or approved by an authorised firm. This includes promotional material in any
format. However, there are certain exemptions which may allow an employer to promote a pension
scheme offered in the workplace.
Information on the merits of participating in an occupational pension scheme, which is not a
stakeholder pension scheme or a workplace personal pension scheme, is not caught by the
restrictions on promoting financial products as the employees are not acquiring investments.
In respect of stakeholder pension schemes or workplace personal pension schemes, where you simply
communicate factual information, for example that staff have the option of making a switch from one
default fund to another default fund with no additional element of invitation or inducement, this should
not qualify as a financial promotion. However, if the factual information is presented in a way which also
seeks to promote the pension scheme, encourage a switch, or persuade individuals to join it, then it
could constitute a financial promotion and would need to be approved by an authorised firm unless
one of the exemptions applies.
There are many types of scheme that you might be offering your staff, for example stakeholder,
occupational or group personal pension schemes, and different rules and exemptions may apply to the
different types of schemes. Detailed information which might help is publically available:
• The FSA’s guide on promoting pensions to your employees: www.fca.org.uk/publication/archive/
fsa-promoting-pensions-employees.pdf
• TPR’s guide on how to talk about DC pension schemes with your employees: http://www.
thepensionsregulator.gov.uk/docs/guide-talking-to-your-employees-about-pensions.pdf
In addition to any assistance you may want to provide, automatic enrolment law requires employers
to enrol certain employees into a pension scheme and to provide some specific information in writing
and to do so within certain time limits. For further details please see www.tpr.gov.uk/resource-info
Promoting other nancial workplace benets
As mentioned above, communications which promote a financial product usually need to be issued
by an FCA authorised firm or approved by them. There are a number of exemptions set out in the FCA
Handbook and the Financial Promotions Order which may allow an employer, or service providers
contracted by employers, to promote the following products to staff in certain circumstances
(references to each exemption and their conditions can be found in the footnotes below) –
• employee share schemes;
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• certain insurance products (e.g. life assurance, critical illness, medical, dental and income protection
insurance);
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1 Article 60 of the Financial Promotions Order 2005. FCA Handbook – PERG 8.4.34G and PERG 8.5.5G
2 Articles 72B and 72C of the Financial Promotions Order 2005. FCA Handbook – PERG 8.14.40ABG to PERG 8.14.40ACG
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• sta mortgages provided certain conditions are met;
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and,
• sta loans oered to employees (for example travel card loans).
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What advice should an employer or trustee not give?
Even though an employer or trustee may not need to be authorised, many employers and trustees are
unlikely to be in a position to give detailed advice on questions such as:
• Which of the investment funds on oer under the pension scheme should I choose?
• Would I be better o putting my money into something instead of a pension such as an ISA or the
Lifetime ISA?
• Is it a good idea to transfer benets under my old pension scheme into this scheme?
Such questions would need a detailed understanding of an individual’s financial circumstances and
their expectations and priorities. Although you only need to be authorised by the FCA if you are in the
business of giving investment advice and are benefitting commercially for doing so it is unlikely that
you would be in a position to properly advise an employee or trustee on these matters. An employer or
trustee should not suggest that they are able to provide such advice. Where employees or members
act on this advice, employers or trustees may risk becoming liable for any losses incurred, and may
additionally damage their relationship with employees or members. Trustees will also need to bear in
mind that they have a fiduciary duty to their membership and therefore will need to carefully consider
whether it would be appropriate for them to offer any advice, in their capacity as trustees,
to members.
What an employer or trustee might want to do
Rather than answering specific questions, an employer or trustee could instead consider how they can
provide more general information and support to help staff make their own financial decisions.
You can signpost publicly available resources for information and guidance about financial matters
such as The Pensions Advisory Service, the Money Advice Service (MAS) and Pension Wise, or specific
documents they have published on key subjects, such as the MAS guide to making the most of your
money:
https://www.moneyadviceservice.org.uk/en/employer-best-practices/money-guide
Separate from your automatic enrolment obligations, you may also give employees purely factual
information on their workplace personal pension arrangements, provided this information is not
presented in a way which also seeks to promote the pension scheme or persuade individuals to join it.
This means that, among other things, there is no difficulty in providing the Key Features Document of
the workplace pension scheme provider which contains essential information that staff will need to
know. You could also provide factual information about an occupational pension scheme (which is not
a stakeholder pension scheme or a workplace personal pension scheme), and this would not be caught
by the restrictions on promoting financial products.
3 Articles 72D and 72E of the Financial Promotions Order 2005. FCA Handbook – PERG 8.14.40ADG to PERG 8.14.40AEG
4 Article 72F of the Financial Promotions Order 2005. FCA Handbook – PERG 8.14.40AEAG to PERG 8.14.40AFG.
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Information which does not relate to investments or financial products is also out of scope of FCA
regulation, and as such an employer might freely provide support to encourage their staff to ensure
that, for example:
• their tax code is correct;
• they are claiming appropriate benets;
• they have a will in place.
Equally, general help for employees on things like budgeting or comparing utility providers are outside
the scope of FCA regulation.
An employer or pension trustee might also suggest that staff seek formal advice from an authorised
financial adviser or their pension scheme provider. In general, this may be fine if –
• The employer or trustee simply suggests an employee seeks advice from an FCA authorised rm
and nothing more.
• The employer or trustee provides access to an FCA authorised adviser at their expense or as part of
a sta benet.
More information on this is also set out in the FCA’s Perimeter Guidance.
If you are looking to arrange advice for your employees as an employer, then you might want to be
aware of the government’s income tax exemption for Employer-arranged pensions advice.
Examples of practice and considerations
Example 1: occupational pension scheme - provision of information
The trustees of the ABC Pension Scheme Limited, a defined contribution occupational pension
scheme with multiple sponsoring employers, prepare a series of documents for members setting out
the terms of the scheme and the different investment options the member can choose.
As the scheme is an occupational pension scheme, the communications do not constitute regulated
advice and are not subject to the restrictions on promoting financial products.
Pension trustees have a duty of care imposed by trust law to ensure that their actions are in the best
interests of the membership. So they need to make sure that the communications are accurate.
Example 2: employer-sponsored at retirement seminars
Employer DEF is aware that many of their employees are over 50 and so potentially starting to consider
their retirement options. Employer DEF has both a legacy occupational pension scheme and a newer
group personal pension scheme (which they use for automatic enrolment).
DEF decides to commission an employee benefit consultancy (EBC) to give a series of in-work
retirement seminars to interested employees. The EBC is an FCA authorised firm and, as such, is
responsible for any regulated activity that it undertakes. These seminars cover factual information
only, but there is also the possibility to get individual advice from an FCA-regulated adviser, which the
firm will subsidise.
As the seminars cover factual information, this would not generally be regulated advice but may be
classed as a financial promotion, depending on the content and context (the EBC should be able to
advise the employer about this). In the event that it does amount to a financial promotion then it would
need to be approved by an FCA authorised person but this would be a matter for the EBC to satisfy.
Advice given may or may not be regulated, but – as it is delivered by an FCA-regulated adviser and not
the employer – the adviser bears the responsibility for complying with relevant FCA rules.
