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FSA refuses to reveal Treasury price cap talks

The FSA says it is not in the public interest to disclose discussions or memos exchanged with the Treasury over the 1 per cent stakeholder cap following a Freedom of Information Act challenge by Money Marketing.

The regulator says revealing information and views shared with the Treasury would inhibit the future free and frank exchange of views between the two bodies. It argues that disclosure of research and information given to the Treasury to help set the cap would be “likely to inhibit the FSA in the effective conduct of its regulatory responsibilities and Government departments in the development of policy”.

Money Marketing is appealing against the FSA decision.

Clerical Medical head of industry affairs Nigel Stammers rejects the FSA’s argument, saying the FSA should be prepared to stand by any comments it has made about the industry and considers it must be in the public interest to know what submissions led to the Treasury choosing a figure of 1 per cent.

The low level of the stakeholder charge has seen the sale of pensions slow to a trickle and the Government forced into an embarrassing U-turn when it raised the cap to 1.5 per cent last November.

Many product providers, which spent millions of pounds on marketing stakeholder products, are now shunning stakeholder in favour of pension products above the charge cap.

An FSA spokesman says: “The relationship between the FSA and the Treasury depends on open and candid exchanges being possible, which will be inhibited if the exchanges become publicly available, as any differences in opinion could be exploited for political, commercial or personal purposes.”

Stammers says: “The FSA are contradicting themselves. It is in the consumers’ and the industry’s interest to know how price caps are arrived at.”

Larking Gowen senior financial adviser Colin Trayler says: “The 1 per cent figure was hopelessly inadequate and I would be interested to know how they calculated it. When the Sandler initiative fails and the next savings initiative comes in, I want to know what charging structure we can expect.”

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