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Euro firms will not fit into polarisation regime

European developments could overshadow whatever path the FSA decides to follow over polarisation, according to FSA manager (packed products) Brenda Gibson.

She said it will not be long before European providers enter the UK market but they will not fit into the current polarisation regime.

However, Aifa director general Paul Smee said that, at best, there was a mixed signal coming from Europe and two different directives give different interpretations as to the legitimacy of polarisation.

There are two relevant dir-ectives making their way through the European Parliament which have impact on product distribution – the Insurance Intermediaries Dir-ective and the Investment Services Directive.

Smee said the first applies only to insurance products and can be interpreted to say multi-ties must be allowed to operate in the UK. The second has a bearing on investment products and, if anything, strengthens the case for polarisation.

Polarisation has always been seen as anti-competitive by European standards but until now the FSA has disregarded these arguments, saying the regime is in the best interests of consumers.

Gibson said: “Irrespective of what views we have in the UK on reforming our system, it will not be long before firms start crossing our borders that do not fit into polarisation.”

Smee said: “Anyone who bases change on the modelled thinking of Brussels will not only be silly, they would be making a mistake.”

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