The FSA is coming under pressure to clear up confusion surrounding whether IFAs have to demonstrate that personal pensions are at least as suitable as stakeholder as a vehicle for contracting out.
The issue concerns whether the compliance requirement, which demands that IFAs must demonstrate that a personal pension is “at least as suitable” as stakeholder as part of the reasons why process on personal pensions also applies to contractingout schemes.
Without clarification on how far RN53 extends, there could be a danger that IFAs are making non-compliant recommendations on contracting out because they are not applying RN53 to their advice.
Scottish Life head of communications Alasdair Buchanan says: “It is far from clear in what situations RN53 extends. Logic suggests that it does cover contracting-out vehicles but it requires clarification urgently. It shows the industry is being dragged into a state of confusion by matters which the regulator has not resolved.”
Informed Choice managing director Nick Bamford says: “What the adviser should be free to concentrate on is making sure the right decision on contracting out is being made, not wasting time on the name of the personal pension vehicle recommended because nowadays there really is very little difference between personal pensions and stakeholder.”
FSA spokeswoman Jackie Blyth says: “RN35 applies across the board and is not limited to any type of pension or scheme.”