FLAG - Fix LoA Action Group

New Industry Group Established to Reform Letters of Authority Process: FLAG - Fix LoA Action Group

Thursday, 13th June 2024 - The Pension Lab, a pensions technology specialist, is announcing the formation of the Fix LoA Action Group (FLAG), a new industry action group aimed at overhauling the Letters of Authority (LoA) process. The inaugural meeting will take place on 23rd July 2024, marking the beginning of a concerted effort to streamline and improve LoA procedures across the industry.

Under the leadership of Scott Phillips of The Pension Lab and independent consultant Justine Pattullo, FLAG is a unique industry action group that brings together a diverse coalition of organisations, including master trusts, pension providers/platforms, advice/paraplanning firms, industry bodies and numerous fintechs. The collective effort is a direct response to the release of the influential white paper in April 2024 entitled, What Lies Beneath Letters of Authority from the #LogYourLoAPain campaign, which identified significant inefficiencies and the urgent need for reform in the LoA process.

Scott Phillips, CEO and founder of The Pension Lab, underscored this initiative's critical nature: "Our white paper brought to light the pervasive issues within the LoA process, which impacts all stakeholders. With the increasing number of pension pots and transfers and the significant impact of pension dashboards forecast to increase LoA numbers eightfold, the need for reform is more urgent than ever. The establishment of FLAG is a pivotal step towards actionable solutions."

During the inaugural meeting, three key working groups will be proposed as priority areas for improvement. Each group will be dedicated to addressing specific aspects of the LoA process, including LoA requests, LoA fulfilment, and identity verification. 

Billy Burnside, managing director of Criterion and founding member of FLAG, adds, "By bringing together a balanced representation of all affected parties and facilitating greater collaboration, FLAG aims to prioritise and tackle the most pressing issues. The way to achieve this is by working together as an industry. Our structured approach, with focused sub-working groups, will also showcase the benefits that Standards can bring to the LoA process."

Paul Holland, CEO and founder of Beyond Encryption, said: “Dealing with customers at a distance presents several challenges - including the need to authenticate relevant parties. Whilst 'wet signatures' have been the long-standing and accepted mechanism for verifying documentation, they provide little to no assurance of the authenticity of the signatory when transactions are completed remotely. For the LoA process to continue using wet signatures as a form of identity verification is not only outdated but seems at odds with where we, as an industry, are trying to get to in terms of digital servicing standards. We continue to support this important initiative to bring identity verification and the LoA process under the spotlight.”

Based on the success of the #LogYourLoAPain supported by Criterion, Beyond Encryption, Punter Southall, EV, Penny, MypensionID, PensionBee, Octopus Money, and CATS; FLAG's mission is to drive concrete improvements through industry collaboration. It aims to create an efficient LoA process that currently costs the industry over £442 million every year. The group calls on master trusts, providers, platforms, industry bodies, and advice professionals to join this vital initiative by contacting Justine Pattullo directly.