The Association of British Insurers has scheduled an emergency meeting to discuss plans to lobby the FSA on its crackdown on pension providers’ projection rates.
In a note to members, the ABI says some firms have significant concerns about a recent warning from FSA director of conduct risk Dan Waters. Waters reiterated firms must use lower than standard rates to project returns for cash and cash-like investments and that using caveats alongside standard rates is not adequate.
But the ABI doubts if the changes would deliver “concrete benefits for consumers” to justify the costs, which some estimate could be tens of millions of pounds.
To build its case, the ABI has called on members to provide proof that the FSA has made a U-turn on its policy. The note says: “Broadly, we will be looking for written confirmation from the FSA that the use of standard rates was accepted by them.”
At the meeting, set for November 24, members will consider the evidence collected as well as the costs and benefits of the changes, a realistic timeframe and the difficulties, risks and likely impact.
Waters has threatened action against providers that do not stop using standard projection rates for cash and revealed plans for a further sample review next year.
An ABI spokesman says: “The issue of projection rates is being discussed with ABI members and we are looking at the implications for the industry and its customers of the FSA’s statement.”
Royal London head of group communications Alasdair Buchanan says: “It comes down to the cost of the changes against the benefit. The cost looks to be huge and the benefit trivial. Someone has to pay for it and it is ultimately passed on to the customer.”