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Can policies survive the change of regulation?

IFAs have questioned whether with-profits policies can survive changes in the regulatory regime.

Thomson&#39s Group head of research Andrew Miles doubts whether the black box which he says with-profits depends on can be sustained in the light of the regulatory demands for transparency.

The IFA believes there is still a need for WP products because there remains a consumer demand, with Miles arguing that products such as constant proportion portfolio insurance remain little understood either by the public or advisers.

Miles did voice concerns about the history of overpayment on some with-profits policies and expressed fears about the asset allocation of closed funds.

Hargreaves Lansdown&#39s head of pension research Tom McPhail was more cutting on the issue, saying issues such as Equitable Life and endowment shortfalls have made with-profits policies unmarketable. He also pointed out that the Sandler suite of products made reference to smooth managed funds but not to with-profits funds.

Miles said: “I have to ask to what extent with-profits relies on the economics of the black box and is that consistent with the FSA requirements. I do not think it is.”

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