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Collective thinking

Following publication of the article in Money Marketing, headlined, OFT tells regulator to get menu sums right, I am writing to clarify the situation about market averages on the menu.

Following the complaint from Aifa to the OFT last year, we agreed with the OFT that we would examine the market average figure for collective investment schemes to see if there had been any problem with the data.

This investigation showed that some providers had given the FSA information which included non-advised data, which typically has very low commission rates.

We asked providers to resubmit the data to correct these errors. This allowed us to recalculate the market average for CIS. The result was the the market only increased from 3.59 per cent to 3.9 per cent.

Given the size of the revision, it was thought not sensible to change the published market average. This was agreed by the OFT, who also agreed with us that the understatement had not adversely influenced consumer decisions and there was no current evidence of consumer detriment.

We have made changes to the data collection process to reduce the risk of this problem happening again. These changes include altering the wording in our questionnaire and covering letter to providers to focus more sharply on the need to exclude non-advised data,

In addition, we are improving the quality assurance of the data collected to minimise the risk of including non-advised data.

DANIEL WATERS
Director of retail policy, FSA

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