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&#39League tables will lead to misbuying&#39

The financial services industry is warning that Government plans to force


the FSA to publish product league tables will lead to a misbuy ing


epidemic.


Experts fear consumers will believe that the tables are officially


endorsed best-buy tables and will shun advice.


Some industry figures also feel the tables make the scope of the FSA too


wide, putting it in the position of offering investment solutions.


The tables, which are expected to be published in March, will focus on the


most popular investment products, such as personal pensions, endowment


policies, equity Isas and investment bonds.


The regulator plans to rate financial products on 10 criteria, including


quality of service, clarity of sales lit erature, price, flexibility, risk


and reward.


It is also proposing to rate the financial strength of product providers


selling with-profits investment plans.


But the FSA is controversially rejecting using past performance as an


indicator, despite its widespread use by consumers.


Senior regulators are aware of industry disquiet but they have been told


by the Chancellor that they must see the project through.


Regulators say they want to provide an opportunity for the industry to


shape the league tables.


The FSA emphasises that the tables should not replace the need for advice


but will help to inform consumers better and put pressure on poor buys.


Economic Secretary to the Treasury Melanie Johnson says: “The tables are a


very important part of the consumer&#39s tool kit and will encourage better


products.”


FSA spokeswoman Sarah Modlock says: “The consultation should be seen as a


positive opportunity for firms to make a difference to the way this project


develops.”


But LIA director of communications John Ellis says: “It will be very


difficult to put together anything that will be at all meaningful to


consumers.


“Less sophisticated investors who mistake these for best-buy tables may


buy the wrong product and will have no comeback from a financial adviser.”


IFA Promotion managing director Ann-Marie Martyn says: “Consumers will be


confused into thinking these are best-buy tables.”


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