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FSA could make WP fund disclosure compulsory

The FSA is believed to be looking at making disclosure of underlying with-profits fund performance compulsory for life offices as part of the with-profits review.

Industry sources say that the FSA is going to crack down on life offices which do not reveal details of underlying fund performance and bonus returns to customers.

The news follows the naming and shaming of life offices which would not reveal fund performance by Chartwell last week. Legal & General, Scottish Widows and Friends Provident refused to reveal performance details for its guide to with-profits bonds.

The FSA announced it would review with-profits business in January to look at actuarial discretion and quality of information given to policyholders. The industry is also facing a second Myners-style report which is expected to come down hard on with-profits obscurity.

Cazalet Financial Consulting, which rates life offices on with-profits strength, is penalising firms which do not disclose information. Principal Ned Cazalet says: “This situation where companies take money from customers but do not then inform them of what has happened to it will change. Life offices which do not reveal this sort of information will soon find themselves in an embarrassing position.”

Clerical Medical spokesman Tony Bloomer says: “We do not have a problem giving our fund performance to customers. It will be clearly detailed in our new customer with-profits guide.”

FSA spokesman Rob McIvor says: “It is premature to comment on any specifics of the review. Its broad principles are to look at the reporting of bonuses and performance and giving customers more and clearer information. But it is still very open. The details are still being fleshed out.”

Four of the UK&#39s top fund management families secured places in the Sunday Times rich list as least partly as a result of selling out to global investment banks.

At the top of the fund list comes Bruno Schroder and his family, reportedly worth £1.75bn at number six, partly due the sale of Schroders investment banking arm to Salomon Smith Barney for £1.3bn last year.

Bruno Schroder is a non-executive director with the fund business.

Roddie Fleming and family come in at equal 13th having served as chairman of Robert Fleming for only four months last year before its sale to Chase Manhattan for nearly £4.9bn. The family is reportedly worth £1.3bn.

Perpetual founder Martin Arbib at equal 61st is estimated to have made around £400m from the sale to Invesco and is reportedly worth £450m. The Jupiter and now New Star Asset Management founder John Duffield comes in at equal 134th and is reportedly worth £250m, having earned £175m from the sale of his stake in Jupiter to Germany&#39s Commerzbank.


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