Insurers say they are increasingly worried that the FSA intends to apply the RU64 requirements to Sandler-style products, a “significant disincentive” which would require IFAs to justify every non-Sandler product recommendation.
Members of the ABI's regulation and distribution committee are concerned that despite FSA assurances that RU64 would not be in the Sandler sales regime, nothing has yet appeared in writing stating this.
The FSA says details on how, if at all, RU64 would fit in with Sandler will appear in the consultation paper on the sales process in the next couple of months.
But insurers say they are concerned by lack of a written commitment from the regulator, saying it would be a “significant disincentive to offering Sandler if RU64 became part of the sales process”.
One senior industry source close to the ABI committee says the industry is starting to doubt the FSA's assurances and wants to see something in writing sooner rather than later to alleviate its concerns.
The committee is specifically worried that the measure would be applied retrospectively, a move described as a “massive blow” to medium and long-term savings.
RU64 was introduced in advance of stakeholder pensions, compelling advisers to ensure they were not disadvantaging clients by not recommending stakeholder.
Stakeholder pensions are to form Sandler's pension element and it is the potential impact on the equity-backed savings product within the Sandler suite which the committee is most concerned about.
The source says: “The FSA did make assurances that RU64 would not apply to Sandler, it is now saying it will include it in the CP on the Sandler sales process. If RU64 does apply to Sandler, it will act as a significant disincentive to offering Sandler.”
FSA spokeswoman Louise Buckley says: “Any issues around the Sandler sales process will be addressed in the forthcoming CP which will be published in the next few months.”