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&#39FSA does not want cap applied to stake suite&#39

The FSA has strongly hinted it believes the 1 per cent charge cap is too restrictive and should not be extended to Sandler&#39s stakeholder products, according to Sofa.

In the Tiner Report into the future of life insurance regulation, published last week, the FSA said that to ensure there are sufficient providers, the products will need to be priced at a level which allows for a return on capital.

Sofa managing director Brian Lawless says this is a clear indication that the regulator does not want to see the price cap extended.

While it is not in the FSA&#39s power to remove or raise the price cap, Sofa says it is sending a message to the Treasury at a crucial time as it sorts out the details of how the stakeholder products will look.

The report also questioned the suitability of simple products for all consumers, again raising the issue that it does not agree with Sandler&#39s proposal to remove suitability requirements.

It says: “To ensure that sufficient providers enter the market and there is a healthy level of competition, these products will need to be priced at a level that enables those firms that operate efficiently to make a return on their capital.”

Lawless says: “It is clear that the FSA believes through the experience of stakeholder pensions that 1 per cent is not enough. Tiner is saying as clear as anyone from the FSA would in public that the price cap needs to be raised.”

The FSA would not comment other than to refer to the report.


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