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Directors to carry can for with-profits

Life office board directors running with-profits funds will be answerable for performance and consumers will get more information following the FSA&#39s with-profits review.

The review has divided the industry over reforms which some call a disappointment while others welcome them.

The role of the appointed actuary will be one of discretion only when setting bonus rates and actuarial assumptions, with directors taking responsibility for how the fund operates.

Preand post-sale disclosure will be enhanced, making it clearer how discretion and smoothing is used, bonuses are determined and underlying investments are faring. It will be delivered in two tiers, with a simple version for most consumers and a more complex version for IFAs and informed investors. Norwich Union,Prudential and Standard Life have welcomed the moves.

Britannic Retirement Solutions warns that the reforms threaten to strangle with-profits with red tape but Skandia says the Sandler review now represents the only opportunity to truly reform the industry.

The Consumers&#39 Association calls the FSA “naive and pathetic” for not proposing any real changes to the way that with-profits operates.

Britannic corporate development director Bob Bullivant says: “There is a danger that the concept, which historically has served consumers well, will be strangled out of existence by regulatory red tape.”

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