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FSA manager warns of stake squeeze on firms

An FSA official has warned that making all employers offer and contribute to stakeholder would stretch already straining margins for giving advice on the new pension.

During the question time session at last week&#39s LIA Conference in Birmingham, the FSA&#39s investment business policy manager Brenda Gibson said the squeeze on providing advice caused by the 1 per cent maximum management charge would be increased by the introduction of compulsion.

Gibson said: “If 1 per cent on a voluntary basis is too low to provide advice, compulsion would increase the squeeze.”

LIA chief executive Jeff Travis, Aifa, director general Paul Smee, LIA public affairs director John Ellis and Zurich director of government and public affairs Karl Snowden said they believe the Government is likely to make it compulsory for all employers to contribute to stakeholder schemes.

Ellis says: “I guess if full-scale compulsion was brought in, employers would go to stakeholder schemes and the scope for pension choice may be more limited. But I do not think that it would increase the squeeze, as an element of advice would still be required to set up stakeholder schemes.”

FSA spokeswoman Jackie Blyth says the FSA does not have an official view on this subject and claims Gibson was voicing a personal opinion.

LIA Conference, p9

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