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ABI rejects call for external actuaries

The ABI is calling for an external review of appointed actuaries&#39 recommendations about with-profits funds, saying this would improve clarity about the way funds are operated.

However, in its submission to the FSA&#39s consultation on with-profits funds, the ABI rejects calls to force life offices to use external actuaries to set bonus rates or to have consumer representatives on pension providers&#39 boards.

The response says: “An external review would, as well as acting as a direct check that the appointed actuary had discharged his or her duty of protecting policyholders&#39 interests, be likely to strengthen his or her role in advising the board. The ABI thus supports the principle of external review.”

Another recommendation is for any outside financial security ratings on the strength of funds such as those done by Moody&#39s or Standard & Poor&#39s to be made public to reassure customers and the market.

The ABI criticises its own members, saying most life offices do not use their discretionary powers fairly and for the benefit of all policyholders, but it does not support further restrictions on discretion.

Skandia has attacked the ABI&#39s submission, saying it fails to tackle the root of the problem – the discretion allowed to with-profits life offices.

Skandia senior manager pensions development Brian Newbould says: “I cannot see how an external actuary is going to make any difference.”

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