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FSA needs to live up to expectations

AMP&#39s plans for its UK business present the FSA with the ultimate test of whether anyone should expect anything from policyholders&#39 reasonable expectations.

If alarm bells were not ringing when the original AMP “Henderson” split was announced, they are now, as NPI policyholders have been told their with-profits policies are now simply bond and property investments – not for sound investment reasons but because such investments require less capital backing. They have also been told to expect few, if any, bonus payments in future. London Life members face a similar fate.

It is very difficult for IFAs to work out if London Life, Pearl and NPI policyholders are being abandoned in favour of the group&#39s Australian shareholders.

They cannot determine whether the way in which the Pearl fund was used to buy UK businesses means Pearl members are owed by the parent group.

They are not well placed to determine whether any promises made by the AMP companies&#39 salespeople or undertakings given to IFAs when they sold policies have now been breached.

Finally, they cannot know if the actions proposed by AMP are necessary or represent an easy escape route from the burden of the UK businesses.

The only organisation with a chance of answering these questions is the FSA.It should examine the proposals and give its view quickly. It may require the FSA to intervene to ensure that policyholders are not discriminated against. It only has about six months to do so.

If the standard for the reasonable treatment of policyholders was lowered, that would be a terrible failure which would come back to haunt the FSA and consumers.

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