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FSA checking on indirect benefits

The FSA has just concluded a review of the indirect benefits paid by product providers to intermediaries which could uncover anomalies.

The review, which has been conducted over a four-month period, required product providers to share with the FSA all the indirect benefits they paid out over this period. It also looked at what intermediaries claim to have received in indirect benefits and some in the industry believe there are bound to be mismatches between the two.

The review is understood to be linked to the letter the FSA sent out recently to the chief executives of life companies, banks, building societies and intermediaries warning them that the payment of inducements to ensure a place on a multi-tie panel is against best practice.

Scottish Widows intermediary & partnership director Robert Wyllie believes an answer to the problem of inducement payments would be for providers and intermediaries to be transparent and disclose all significant transactions. Wyllie is also concerned about the proposed relaxation of the rules on technology saying unless it is closely monitored it could lead to abuse.

He says: “The key to all this is transparency. If there is a feeling that things are going on behind closed doors, and if that means formal disclosure of all significant items, then this should be something the industry is willing to consider. The relaxed rules on technology should also be closely monitored to make sure there is no abuse.”

Royal London head of corporate affairs Gareth Evans says: “By asking product providers and IFAs to list the indirect benefits they have given and rec-eived, I would be surprised if the FSA did not find some mismatches.”

FSA spokesman Rob McIvor says: “This is a stock-taking of the situation.”

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