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FSA probes IFAs justifying GPPs over stakeholder

The FSA is examining IFA letters justifying group personal pension recommendations under the “at least as suitable as stakeholder” rule amid concerns that advisers are not giving satisfactory reasons for shunning stakeholder.

Speaking at a Money Marketing conference in London this week, FSA group manager (investment business policy) Norman Digance said there was a question mark over why GPP sales were still flourishing as stakeholder sales floundered. Digance&#39s speech comes two weeks after MM revealed that the regulator was investigating GPP sales post-stakeholder.

Digance highlighted IFAs recommending GPPs because of the facility to price in advice over 1 per cent, to offer wider investment choice or include with-profits as situations where advisers should not be confident that they have properly justified not recommending stakeholder.

He said that while the regulator would not define “at least as suitable as stakeholder”, drawing parallels with the definition of material disadvantage under regulatory update 64, he still spelt out specific circumstances which may not get IFAs off the hook.

On the issue of the polarisation review, Digance said one of the biggest issues is the lack of availability and affordability of advice and that “something new must be invented” to deal with the problem.

He also said he was a great believer in face-to-face contact and that giving information to consumers was not enough as this information needs to be “unpacked and explained”.

Digance said: “On the issue of the provision of advice to justify GPPs over stakeholder, I would be cautious. If it is because of exotic investment choice or with-profits, I am not so sure of that either. We are casting an eye over the &#39at least as suitable as&#39 letters.”


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