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Churning created vulnerable class

Bankhall chief executive Peter Mann believes the culture of churning inappropriate products has created a class of vulnerable consumers.

At the round table debate, Mann suggested the industry had to carry some of the blame due to poor advice and inappropriate products sold in the past. He said: “We created a culture of reward for unnecessary disturbance. Many people had products that would have been useful if they had kept them for a greater period of time rather than churning.”

Aegon UK chief executive Otto Thoresen said: “There was a vicious circle of behaviour that was not as good as it should have been, leading to increased regulatory red tape, leading to increased costs, leading to a migration towards people with discretionary assets rather than the basics of what we used to do.”

Heron House Financial Management managing director Saran Allott-Davey considered that changes in legislation have been detrimental by creating uncertainty.

She said: “People have been guided in a certain direction but, with hindsight, they might have been better off taking a different course of action. Without the luxury of knowing that a framework will exist for the long term, it puts people off planning ahead.”

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