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Contracting-out conundrum

It is with no pleasure that Money Marketing this week warns of a 2.8bn contracting-out problem which could hit the industry.

Sources tell us that the FSA held a board meeting last week following extensive discussions with insurers about what to do with those who contracted out in the 1980s and 1990s after the pivotal age of 40 for men and 35 for women. Among many possible nasty surprises, insurers may pass on cases where there are perceived problems to IFAs to review though the brunt of those cases should involve directly sold policies. The number of those contracted out who may be due compensation for perceived misselling may be as high as 250,000, the bill as much as 2.8bn.

Once again, the industry’s past could come back to haunt it. MM is very alarmed that the FSA, which say it will not regulate retrospectively, may be about to do just that. There are fears that IFAs and life companies could struggle to defend claims dating back almost 20 years. The endowment crisis – note we do not use the term scandal – to all intents and purposes became an ombudsman-led and claim-chaser-driven review.

In this case, we remain bemused about exactly what regulatory standards applied at the time and how this will now be interpreted. All we can hope is that the FSA stands up to the consumer lobby.


Widows is slashing 200 jobs in customer services division

Scottish Widows is to cut 200 jobs after a review of its customer services division. The cuts are being made because Widows wants to consolidate back-office processing at its Chatham operation which employs 450 staff. All customer-facing services will operate from Edinburgh and 200 staff will be axed, with 75 of these roles being considered […]

AMI backs regulator in provider/distributor debate

The Association of Mortgage Intermediaries has announced its support for the Financial Service Authority’s stance on provider/distributor relationships, after the publication of its discussion paper last week.AMI associate director Rob Griffiths says: “The message from the FSA is clear: lenders must look to work in co-operation with intermediaries, taking a more open and long term […]

Loansome traveller

Offshore mortgages: RBS International chief executive Ian Henderson explains to Philip Scott how he targets potential markets and why borrowers should be careful of speculating in foreign markets despite the lucrative deals often portrayed in TV property programmes

DB transfers – one more factor to consider

Jim Grant – Senior Product Insight & Technical Support Analyst We look at how higher DB transfer values could cause a lifetime allowance issue and how that affects the advice process. Advisers are receiving an increasing number of requests from clients looking to transfer their pension from final salary schemes to personal pensions. This is a […]


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