Calls for urgent reform of LoA process after report reveals wasted cost

A new report has estimated that £442m is wasted every year due to ‘inefficient’ Letters of Authority (LoA) processes.

The LogYourLoAPain Campaign revealed that altogether 3.9 million LoAs are sent every year, an average of 6.5 per financial adviser.

Overall, 10% of these require wet signatures.

According to the white paper, published by The Pension Lab, the LoA procedure takes an average of 130 minutes to process, costing approximately £111 each.

And it warned things are only going to get worse, with the delivery of Pensions Dashboards in 2026 expected to increase LoA volumes eight-fold.

The Pension Lab said it hoped the findings would “raise awareness of the sheer volume and wasted time and cost of the Letter of Authority (LoA) process”.

The LoA is a gateway process for individuals navigating financial advice or pension transfers. As a legal document, it authorizes third parties such as advisers or pension firms to access and/or modify the authorizing individual’s financial plans and policies.

The Pension Lab is now calling on the sector to work collaboratively to fix the LoA problem – and “drag it from an analogue to a digital world”.

Supported by nine organizations including Criterion, Beyond Encryption, Punter Southall, EV, mypensionID, Penny, PensionBee, CATS and Octopus Money, and led by The Pension Lab and Justine Pattullo, the LoA initiative aims to drive urgent reform of the outdated LoA process.

The Pension Lab CEO and founder Scott Phillips said: “The LoA process is fundamentally flawed and it needs urgent attention.

“It currently makes the advice and transfer process costly and undermines consumer success in achieving their financial objectives. It’s not good enough by a long stretch.

“In addition to poor customer experience of lengthy delays, which is the most important thing here, financial firms also risk non-compliance with the Financial Conduct Authority’s (FCA) Consumer Duty rules, which mandate avoiding foreseeable harm and enabling customers to pursue their financial objectives effectively.

“Our white paper exposes the 3.9 million LoA volumes and the consequent £442m that is wasted annually on a very important but very poorly executed administrative process – and it is ultimately the consumer who pays for the inefficiency of the system.”

Consulting lead for the LogYourLoAPain campaign, Justine Pattullo described the £442m annual cost as “a phenomenal waste of money.”

Criterion managing director Billy Burnside said: “The LoA process demands urgent attention, and recognition from both regulators; the FCA and TPR.

“As a prolific cross-organisational process, we need a collective commitment to improve it from stakeholders so that we can all gain improved efficiencies and security – and importantly provide our due duty of care for the consumer.”

Octopus Money CEO Ruth Handcock added: “The Letter of Authority process can be a real headache for customers, involving lots of time, paperwork and back-and-forth between providers. We support The Pension Lab in this important campaign to put customers first, and fix this outdated process once and for all.”

Beyond Encryption CEO Paul Holland said: “The inefficiency and costliness of the Letter of Authority process is something that is in dire need of change, with The Pension Lab’s latest report laying out a clear pathway towards a more streamlined, secure, and customer-centric future

mypensionID director of digital solutions and innovation James Slevin said: “As highlighted by the findings in the white paper from The Pension Lab, the sheer volume of LoAs, exacerbated by initiatives such as Pensions Dashboards and auto-enrolment, demands urgent attention.

“It’s time to reimagine this process and redirect resources toward more impactful endeavors.”

The next phase of the collaborative initiative involves hosting a series of roundtable workshops.