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Decision trees could take in stakeholder suite to curb misbuying

Decision trees could be extended to cover the Sandler review&#39s stakeholder suite of products in a bid to prevent a rash of misbuying and to conform with future European law.

An overlooked clause of the Sandler report acknowledges potential for consumer detriment in the stakeholder suite of products, such as when the investor has not got a long enough time horizon or where the investment needs to reach a vital financial target. But it claims a point of sales warning will be adequate and makes sales of the products, designed to be cheap and sold without advice, safe.

The footnote in the report says: “If necessary, particularly if this were required to conform to the requirements of the Investment Services Directive, this could be extended to mandating the use of some simple decision trees during the sales process although this should be kept to a minimum.”

Aifa director general Paul Smee says: “Decision trees without intermediation have been proved to be unpopular. I do not think Sandler is hostile to advice but is trying to make it more simple and cheap but our question is does this create customer dissatisfaction down the line.”

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