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Davies hints at radical change as he savages &#39toothless&#39 PIA

FSA chairman Howard Davies has rubbished the PIA&#39s record, labelling it costly, ineffective, intrusive, oppressive, toothless and inadequate while tipping radical change to polarisation.

Providers say radical reform is now more likely contrary to expectations following the FSA&#39s open meeting in October when the head of polarisation review David Severn appeared to favour gap-filling over multi-ties.

Davies, addressing the Foreign Banks & Securities Association Conference in London, asked whether polarisation is still fit for its intended purpose and why the UK has polarisation while countries like Australia and Canada do not.

He tore into the PIA, calling it the least satisfactory part of his inheritance.

He said: “We find ourselves in a position where the existing regime is thought by the provider firms to be costly and ineffective. It is felt by intermediaries to be intrusive and oppressive and is considered by consumers to be toothless and inadequate.”

Separately, Davies told financial website Cantos that the FSA is not proposing to give individual advice and if IFAs are worried this is the case “they have got a rather fragile business model”.

Aegon corporate development director Laurie Edmans says: “It reads to me that Davies was alerting the market to the possibility of more radical change than the impression we got on October 4.”

Norwich Union sales and marketing director Peter Hales says: “We think the direction is more fundamental and radical than we thought in October.”

Comment, p31

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