Pension Lab has launched a performance index to help providers, platforms and pension schemes benchmark their letter of authority (LoA) processing, drive collaboration and raise industry standards.
An LoA is a legal document enabling third parties, such as financial advisers, to request information on client plans and policies.
Despite its essential role, the process often takes weeks or more to complete due to inconsistent formats, wet signature requirements and repeated chasing.
The ranking is based on data from thousands of LoAs processed monthly through Pension Lab’s digital LoA system, with over 230 different providers, platforms, master trusts and third-party administrators.
It ranks the performance of the 10 highest-volume LoA-processing organisations anonymously.
Response times range from an average of 4.5 days for the fastest to nearly 40 days for the slowest.
By way of comparison, manual LoA processing timescales range from 9.6 days to 59.5 days.
Pension Lab will publish the index quarterly, starting with Q3 2024 data. Q4 2024 data is due to be published in February 2025.
Pension Lab chief executive and founder Scott Phillips said it will help providers, master trusts and platforms prioritise improvements that benefit Consumer Duty compliance and cost-savings.
It will also help deliver improved servicing for advisers and consumers.
“Our digital LoA solution has processed same-day LoAs, so we know what is achievable. However, far too many LoAs drag on unnecessarily,” he said.
“To achieve industry-wide efficiency, we need to modernise requirements – eliminating wet signatures and paper formats – and act now for lasting improvements.”
Pension Lab has long championed improvements to the LoA process through initiatives such as the #LogYourLoAPain campaign, the white paper ‘What Lies Beneath Letters of Authority’ and the creation of the ‘Fix LoA Action Group’ (Flag) network.
These efforts have brought attention to the significant costs and inefficiencies associated with LoAs, which currently impose an estimated annual cost of £442m across the sector.
With pensions dashboards and increased consolidation expected to drive an eightfold increase in LoA volumes, addressing these inefficiencies has never been more urgent.
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