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FSA favours filters for stake suite

The FSA favours a regulated sales process led by filter questions for the

new Sandler suite of stakeholder products.

In its discussion paper Options for Regulating the Sale of Simplified

Investment Products, published last week, the regulator outlined three

possible options for the new regime but indicated that it favoured the

second option, led by filtered questions.

The first option would involve a “self-help” approach involving warnings

about the products but leaving the burden of responsibility on consumers in

deciding whether it is suitable for them.

The second is a “guided self-help”, including a series of filtered

questions decided by the FSA aimed at screening out consumers for whom the

products are not appropriate. Firms employing this sales process could not

be held liable for poor advice as long as they stuck to the set questions.

Finally, the “focused advice” option would see advisers making a limited

assessment of suitability according to guidelines laid down by the FSA.

Advisers could give advice on the products without having to attain FPC3,

the level required to be a fully regulated IFA. The FSA says it is eager to

consult with the industry on the options.

The regulator stresses that any final sales regime will largely depend on

the actual structure of the new products and the Treasury has yet to

consult on this issue.

FSA director of conduct of business standards Michael Folger says: “Of the

three options that we have set out, regulation of the sales process based

on filter questions to screen out consumers at clear risk of buying

unsuitable products looks quite promising.”

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