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Davies voices fears over Sandler&#39s safe products

FSA chairman Howard Davies has voiced his concerns over Ron Sandler&#39s proposals for a “stakeholder” suite of safe products, saying there is “some difficult work still to be done” before the idea could become a reality.

Speaking at the FSA&#39s annual meeting in London last week, Davies said it would be difficult to relax the conduct of business regulations without risking widespread misselling.

Davies gave one of the strongest indications yet that the FSA is considering other options than its defined-payment system for remunerating IFAs.

He said Sandler and representatives of the IFA sector such as Aifa have argued that the DP proposal is too restrictive and the FSA is looking at alternatives.

Many in the industry view Davies&#39 comments on “stakeholder” products as negative. The products are seen as Sandler&#39s key proposal to close the savings gap.

The decision over whether to move Sandler&#39s proposals forward will lie with the Treasury.

Although the Government&#39s initial reaction to Sandler was broadly welcoming, speculation is mounting over whether it has the appetite to implement safe-haven products.

Davies said: “There is some difficult work still to be done on product features to ensure that it is possible to free up the conduct of business regulations without the risk of widespread misselling. We already know that the consumer panel has strong views on this issue.”

Aifa director general Paul Smee says: “I hope that this indicates that Howard Davies has the same sort of reservations about this proposal that Aifa does.”

Consumers&#39 Association senior policy adviser Mick McAteer says: “The FSA must be suffering from the dilemma of how you protect consumers without advice.”

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