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&#39Life offices and fund firms facing post-polar shakeout&#39

The FSA&#39s depolarisation proposals will lead to a steep decline in the number of life and pension providers and fund managers, according to consultancy Pricewater-houseCoopers.

The inevitable shake-up that will follow depolarisation will also lead to the banks having a much greater control over distribution, says insurance division partner Andrew Duncan.

Speaking to Money Mark-eting at the PWC/CBI quarterly financial services survey in London this week, Duncan said the changes the regulator is proposing will result in life, pension and fund providers essentially becoming manufacturers of products for high-street banks which will have a stranglehold on distribution.

He believes the introduction of stakeholder and the 1 per cent world that came with it has improved terms for consumers but made it much more difficult for pension providers to make ends meet and has proved damaging to overall confidence in the market.

Duncan said: “I expect the depolarisation proposals will really force out the winners and the losers in terms of numbers of providers. There will be a significant decline in the number of fund managers selling their products in the future and there just is not room for all the existing life and pension providers. The banks are going to take a bigger share of the distribution, let&#39s face it.”

The survey indicates that optimism in the life sector has deteriorated for the fifth consecutive quarter, albeit by the smallest amount in that time.

Business volumes are lower than normal although insurers expect them to improve modestly over the next quarter.

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