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&#39Depolarisation is set to take us back to the 80s&#39

The Consumers&#39 Association and Liberal Democrat trade and industry spokesman Vincent Cable are warning that the end of polarisation risks repeating the conditions that lead to widespread endowment misselling of the 1980s.

The comments follow the record £1m fine slapped on Lloyds TSB for endowment misselling by Abbey Life between 1995 and 1999, which has led the CA to question whether the regulator should not also be looking into misselling from before that date.

Cable is calling on the FSA to conduct a wholesale investigation into the practice of contingent selling in the past, which he says presents a prima facie misselling that the regulator should pursue.

He is also calling for mortgage regulation to oblige lenders to say that mortgages are not dependent on any other financial service products being taken out.

CA senior policy adviser Mick McAteer says: “Depolarisation is going to replicate the conditions of the 1980s when widespread misselling of endowments took place.

“There is going to be an unholy alliance of big banks and insurance companies to exploit a captive market. That is why we are so worried about products being sold without advice.”

Cable says: “The current polarisation proposals are highly retrograde. Many people were told in the past that they could have a mortgage as long as they took out an endowment. The banks do not have a good record and to promote measures that give banks a bigger share of the market is not healthy.”

Aifa director general Paul Smee says: “It is good to see past problems being attributed to their source. We have always said that polarisation gave protection to consumers. At least with the menu option they will now have the choice.”

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