The Sandler suite of products will fail to meet the needs of low to middle income consumers and runs a real risk of misselling as currently proposed the FSA's Consumer Panel has warned.
The Panel says face-to-face advice is crucial to encouraging saving and its absence from the proposed Sandler sales regime means it cannot support the plans.
Its strongly worded statement comes as the Treasury has postponed a decision on one of Sandlers' key recommendations this week.
In the Budget document, the Government said it agrees with the industry's concerns and has decided to delay any move to get rid of the 5 per cent withdrawal tax on life insurance investment bonds.
While it has not ruled it out altogether, it has said it will consider the proposal as part of a larger review of the tax treatment of savings.
The move has been welcomed by providers and the ABI as sensible. Since Sandler's controversial recommendation, they have been aggressively lobbying the Treasury saying it would create an unlevel playing field between fund managers and life offices.
ABI director general Mary Francis says: “The Government has very sensibly decided to re-examine Ron Sandler's recommendation on qualifying policies and the tax treatment of the 5 per cent withdrawal in the context of a wider look at the taxation of savings.”
Consumer Panel chairman Colin Brown says: “There are only two new products here. And neither of these would protect investors from losing some of their money. So neither is safe enough to sell without the normal suitability rules obliging advisers to 'know your customer'.”