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Abbey and Standard clash on A-Day plans

Prestbury Financial is launching a whole-of-market IFA business in January, which aims to double its number of RIs from 200 within a year.

The IFA arm will predominantly be a call-centre operation which is
targeting a 60/40split between phone-based and face-to-face sales.
Commission and fee-based charging structures will be offered although
the latter option is most likely to appeal to face-to-face clients
who will typically be more complex cases.

Prestbury Financial chief executive Lee Birkett says the firm will
launch with 200 RIs but he expects this to double to 400 by the end
of the year. He says the group is being selective in the IFA firms it
signs up and will not touch firms pulling in less than 50,000 a
year in new business.

It will be a sister company to the group’s newspaper referral
business, which has tie-ups with the Telegraph and Sunday Telegraph,
The Times and Express, among others,and its mortgage network,
Solutions Network. Referrals are also expected from the network.

Birkett says Prestbury has invested millions of pounds in technology
to enable online valuations and reduce costs. He says: “We are
launching a whole-of-market business. The only reason to multi-tie is
for commercial gain not for the consumer’s benefit. A lot of our
business will be call-centre-based.”

An A-Day row has broken out between Abbey and Standard Life, with
Abbey claiming Standard’s Sipp is inflexible and does not support
phased benefits while Standard says Abbey is pushing unsuitable
products.

Abbey for Intermediaries head of pensions and retirement Mike Brown
says Standard’s Sipp is restrictive as investors will only be able to
withdraw tax-free cash once. Brown says if policyholders do not take
the full amount, that allowance will be lost after A-Day because the
Sipp is structured as a segmented arrangement.

Abbey is presently marketing its section 32 product heavily, which is
a clustered arrangement that supports self-investment and enables
holders to phase benefits.

But Standard Life senior technical manager John Lawson says that
encouraging investors to transfer into a section 32, particularly
from an occupational pension scheme, is irresponsible when a number
of rules surrounding pension simplification remain unclear. Lawson
says Sipp investors can protect tax-free cash in a number of ways,
such as through signing up a spouse and carrying out a bulk transfer
allowable after A-Day for Sipps but not for section 32s which are
one-person schemes.

He also points out that section 32s lack the investment flexibility
of Sipps, such as the ability to hold property.

Lawson says: “This is product-pushing at its very worst and Abbey is
effectively encouraging advisers to give bad advice. We are saying,
wait until 2006.”

Brown says: “Clients need to be in the right place before A-Day and
Standard Life’s argument is tenuous.”

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