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&#39Safe haven could bring regulation by watchdog&#39

The safe-haven products recommended by the Sandler review could lead to conduct of business rules being determined by Financial Ombudsman rulings, warns the FSA.

At the Distribution Strategies Post-Sandler conference in London last week, FSA head of polarisation review David Severn said if the regulation of the sales process is stripped away, as Sandler proposes, there is a danger of rules being created by subsequent complaints to the ombudsman – a situation that both the FSA and the ombudsman want to avoid.

He warned that such a move would mark a significant departure from the regulatory attitude taken by the FSA, which focuses on monitoring the sales process rather than the products themselves.

Severn said: “The FSA and the ombudsman are wary of a conduct of business regime growing up via ombudsman decisions. We do not want rules to be made by ombudsman decisions.”

FOS head of communications David Cresswell says: “There is a question as to what would be the benchmark that would exist for these products. If there is not one, then the ombudsman would be creating one as a result of the decisions made.”

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