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ABI draws up plans to fight misbuying

The ABI is devising plans to nip in the bud potential misbuying of stakeholder over Isas among low earners.

Money Marketing understands the ABI is working with the FSA towards a discussion paper which will form the basis of preventive measures against any possible recrimination over unsuitable stakeholder and Isa sales.

The move comes amid fears that lower earners may be better off saving for retirement through an Isa rather than stakeholder.

Providers say an investor&#39s decision will be complicated by Government plans for a means-tested minimum income guarantee and the pensions credit which low-earning savers may qualify for in retirement.

ABI spokesman Vic Rance says: “There was a meeting with company and IFA representatives where the issues surrounding stakeholder and Isas, both of which can be sold without advice, were discussed. There are circumstances where individuals are better off with an Isa over a stakeholder or with a proportion saved in both.”

Scottish Equitable business development manager Steven Cameron says: “Clearly, Isas might be considered as an alternative to stakeholder or personal pensions. “Where it gets complicated is attempting to assess the impact of both on means-tested benefits.”

IFAs are welcoming the move, particularly in light of the current omission of the Mig and pension credits from decision trees.

Torquil Clark pensions development manager Tom McPhail says: “If the ABI is aiming to create some simple guidance for consumers on low-level pension savings, this should be encouraged. For direct-offer clients who cannot afford to pay fees for advice and are being blindly encouraged into stakeholder, it is not clear where the scope for redress lies.”

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