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FSA finds factor X but is hazy on reopening cases

IFAs could be penalised for making progress in the pension review if the FSA reopens certain phase two pension transfer cases following its announcement on factor X.

The FSA has finally decided on a correction toits formula by which the loss is calculated on some transfer cases, known as factor X.

But it is refusing to say whether it will rework cases where redress has already been paid.

The lack of a decision means the pension review cannot be brought to a speedy conclusion.

The Pension Advisers Support Scheme says reopening cases that have been settled would be “harsh” on IFAs because the original calculations were done on the basis of the FSA&#39s own guidance.

It says such a move would be “penalising” the compan-ies which have cleared the most cases.

Around 24,000 cases have already been settled and 15 per cent of those are from IFAs, according to the FSA.

As a result of factor X, the overall bill for phase two ofthe pension review is likelyto rise by 5 per cent.

In 1998, the bill was estimated to be between £3.8bn and £6.5bn.

DBS revealed this week that its profits have been hit by the FSA&#39s bungle on the original loss calculation.

The Huddersfield-based network has pumped an extra £1.5m into its pension review project due to the wait forfactor X.

As a result, DBS&#39s operating profit for the year ending March 31 plummeted by 40 per cent to £3.4m from £5.65m in 1999.

Pass chief executive Mark Penton says: “We hope that, for the sake of IFAs, the FSA does not order a reworking of cases already settled.”

FSA spokeswoman Jackie Blyth says: “We will have to base any judgement on investor protection.”


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