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Bee points to opportunity in pension upheaval

The UK Shareholders’ Association has joined the Association of Investment Companies and leading advisers in warning that FSA plans to relax listing rules could result in a “disaster” matching the split-cap debacle.

Consultation closes this month on FSA plans for international trusts that would waive the requirement for an independent board and to disclose cross-holdings. The latter measure was introduced specifically to protect investors after the split-cap problems.

AIC director general Daniel Godfrey warns of the dangers in allowing the prestige of a full London listing without the standards to protect investors. He says: “This consultation represents the last opportunity to convince the FSA its proposals undo all its previous good work and might lead to a disaster with investors losing their shirts due to a lack of proper regulation of companies.”

UKSA communications director Roger Lawson says in one sweep the FSA has wiped out the hard work the industry has done to clean up its act after the collapse of many split caps.

Lawson says: “Our concern is for the unsuspecting British investor who will buy these funds unaware of the potential pitfalls, lack of accountability and transparency that may go hand in hand with these companies.”

Bestinvest head of communications Justin Modray told Money Marketing in December that the plans could lead to another “magic circle” forming with “grave repercussions” for the industry.

The demise of defined-benefit schemes in the UK represents “a big ticket” opportunity for IFAs and providers, according to Scottish Life head of pensions strategy Steve Bee.

Speaking after the announcement that Royal Mail is seeking to close its final-salary scheme to plug a £6.6bn deficit, Bee says the group pension market that has been around for the last 50 years is “disappearing before our eyes”.

But he says the decline of DB schemes represents a massive opportunity for the pension market as huge corporate schemes are broken up into individual and def-ined-contribution schemes. He predicts that competition for disenfranchised former DB scheme members represents a rapidly growing market for the industry.

Bee also says the shift from DB to DC schemes raises the spectre of increased regulation from the FSA if they are run as group personal pensions rather than occupational schemes.

He says: “The real pension market of the next 50 years will be big corporate schemes being broken up into individual, individually managed schemes. This is a big ticket for us.”

But Lowland Financial managing director Graeme Mitchell says: “If you take the Royal Mail as an example, I am not sure the people coming out of final-salary schemes are necessarily the target market for IFAs as we are increasingly aiming for higher-net-worth clients.”

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