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Fear at new pension review

Life offices fear another retrospective misselling review following the

issue of an FSA questionnaire on pre-stakeholder schemes.

The regulator is asking life offices to detail “on what terms” they are

marketing personal pensions and requesting they reveal if their

pre-stakeholder schemes are termed stakeholder-friendly or similar names.

The questionnaire follows on from PIA-issued Regulatory Update 64, which

attempts to guide life offices on how personal pensions should be marketed

in the run-up to the introduction of stakeholder in April 2001.

RU64 focuses on the possibility of “material disadvantage” if a

policyholder decides to convert to stakeholder.

But while the industry awaits the definition of “material disadvantage”

from the FSA, the questionnaire is probing life offices on how they are

enabling contracts to be transferred without incurring disadvantage.

This includes asking the respondent to complete a case study to calculate

potential material disadvantage. The nature of the questioning is leading

experts to fear the FSA is setting the scene for a retrospective review of

the sale of pre-stakeholder schemes.

Scottish Life head of communications Alasdair Buchanan says: “It is

certainly a possibility and one which would be damaging. If it does happen,

the FSA has a large part to play in that it produced RU64 where it talked

about &#39material disadvantage&#39 but did not describe it. If there is to be a

retrospective review of sales, part of the responsibility lies with the



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