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FSA probes with-profits bond sales

The FSA is examining with-profits bonds to see if consumers need to be protected.

Sources within the FSA confirm it is approaching all with-profits bond providers for copies of their marketing literature. It is thought it will then approach IFAs and other distributors.

One life office insider confirms the company has been approached by the FSA and has handed over marketing material. The source says the FSA is looking at the way providers present potential returns.

With-profits bonds have come under fire from the Institute & Faculty of Actuaries for high commission rates and vagueness surrounding return calculations.

Aifa says it is unlikely the FSA will create a Catmark for bonds. Director of policy and technical services Fay Goddard says it is more likely that marketing guidelines will be issued.

FSA spokeswoman Jac-kie Blyth says: “We have said it is in our radar. We want to ensure that people are understanding what they are entering into.”

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