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CP121 will not steal Sandler&#39s thunder

Soon after the PIA was formed, it was said that its chief executive was known to prefer a market where there were a few providers and some big distributors.

Regulating, the average IFA was seen to be highly troublesome. Not just troublesome but also not conducive to regulation at a distance.

I know it is a complete coincidence but is this not close to the market that CP121 could deliver?

I am not suggesting that it is a conspiracy but perhaps the logistical problems of operating the FSA&#39s business model are more of a driver than we think.

As to the suggestion of legal action and the inv-olvement of the European courts, should we not be concentrating on ensuring that, for once, the level playing field is not prepared by those most interested in seeing limited multi-ties prospering?

Resorting to legal action will simply delay the inevitable and, if anything, will just take our eye off the ball.

Responding to CP121, as suggested in my last column, is important but I draw the line at using a “kit” provided by a PR agency.

The validity of a submission is diluted by duplication, it is rarely strengthened. Responding is not difficult. All it takes is to pick the points you want to comment on and off you go.

I continue to stress that responding on the practical effects for consumers and not the effects on our own firms is the only way to go about it.

Many have suggested that the authorised financial adviser will be the choice of the majority but will the capital adequacy remain at £10,000 for those firms which reject fee-based income?

I suspect it will not and perhaps a level of £100,000 is more likely to be imp-osed, forcing the establishment of the distributor-type firm where this level of adequacy is less of an issue.

But to make any decisions now, you must bel-ieve that Sandler will add little to the landscape and that CP121 has stolen his thunder.

I do not subscribe to that view for one second. I truly hope he will address the issue of “with-profitsbonditis” which has bec-ome so prevalent and bro- ught commission rates of up to 8 per cent compared with 3 per cent on unit trusts and Oeics.

This inflammation needs to be dealt with quickly if we are to avoid another review.

The other key area for Sandler to report on inc-ludes legacy pension plans. The plans have improb-ably high allocation rates but have a sting in the tail if made paid up or transferred elsewhere – not forgetting those with capital units.

Perhaps companies which want to obtain the ABI&#39s quality mark should be required to deal with the issue of legacy plans.

Some product providers have already taken care of this issue but some pro-viders have not.

Their reluctance may reflect either an inability to switch plans to stakeholder terms or an unwillingness to take that level of financial hit until it is absolutely necessary.

For these quality marks to have any effect on the public&#39s perception, the providers have to take the financial hit of moving their back book of plans into the 1 per cent world.

Or they can ignore the reality of the new market and find themselves marginalised now and in the future.

The days of the traditional providers controlling the market have gone and those who choose to ignore this do so at their peril.

Just as IFAs have to accept that polarisation has gone in its current form, providers must real-ise that quality is more than being good in the future – it is about being fair in the past.


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Trouble ahead - thumbnail

Pensions: trouble ahead?

The pace of change in the pension’s space has been little short of astonishing, and has left thousands of employers struggling to keep their pension policy compliant, and also on the right side of current best practice and governance. Many employers, and indeed many in the pensions industry itself, would like to see a period of no change during the next term of government. This would give all sides a chance to catch up and draw breath. 


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