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Flight defends under-fire IFAs

Howard Flight has attacked the “middle-class intelligentsia” intent on attacking IFAs on the current pension reform debate.

Speaking at the Money Marketing/Cicero Consulting Summit, the former Conservative shadow Chief Secretary to the Treasury said he found it unacceptable the way IFAs have been treated when they have been a “crucial part” of the distribution model.

Flight, who is part of the Tories’ Economic Competitiveness Group’s pensions sub group, said current reforms put IFAs in an “impossible position”.

The territory of advice on Personal Accounts had not been thought through properly, he said, especially in offering advice to eligible people who opt out of the scheme but want other investment advice.

Flight, who is generally supportive of the Personal Accounts scheme, said that inertia might prevail and make the scheme successful but he feared people would “not lie down and contribute”.

Government proposals surrounding the flatlining of S2P MAIN POINTS

l IFAs will be put in an impossible position

l Less privileged will subsidise the rich through forced annuitisation out of the scheme

l Pension vehicles seen as out of date by younger generation – more emphasis needed on flexible saving, 401K

l Means testing will act as a subtle disincentive

l Logic of annuities is “unpleasant and patronising”, especially to womenhave not been worked out properly and are too “woolly”, said Flight.

He called for greater flexibility in the reforms, highlighting the popularity of the American 401K scheme and previous Tory proposals for a lifetime savings account.

Flight said: “IFAs who have been attacked by the middle class intelligentsia have been a crucially important part of financial distribution and I find it unacceptable that Which? has been heavily derogatory.”

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