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FSA reviews GPPs on charge fears

The FSA is understood to be reviewing GPP sales amid concerns that IFAs are overcharging employers by selling plans with charges over 1 per cent when they could recommend stakeholder.

Senior industry sources told Money Marketing the FSA is examining why GPP sales are flourishing despite the availability of stakeholder.

IFAs have questioned the move, claiming that it is often best advice to recommend a GPP ahead of stakeholder.

The news comes as the House of Commons debates stakeholder following a motion filed by Shadow Secretary of State for Work and Pen-sions David Willetts stating that stakeholder has failed to reach its target audience.

Pensions minister Ian McCartney&#39s predecessor Lord Rooker had previously said the exemption from stakeholder of companies offering GPPs with 3 per cent employer contributions would be reviewed but this is the first indication that the FSA is taking a closer look at GPPs.

The FSA says that monitoring the sales of stakeholder compared with GPPs is a watching brief which forms part of its ongoing regulatory procedures. It claims this kind of monitoring is standard practice for new products.

Legal & General pensions marketing manager Andy Agar says: “If the FSA is reviewing GPPs this is not surprising. There was always going to be a review of GPP exemptions. This adds to the desire for stakeholder to succeed.”

Norwich Union head of corporate pensions Iain Oliver says: “If there is an issue, it will depend on whether IFAs are using companies which offer GPP terms outside of 1 per cent. There is a potential question mark.”

Wentworth Rose managing director Philip Rose says: “There are some clear advantages in recommending certain GPPs over stakeholder but if the FSA is not happy with this then they should give some kind of wind-up date for GPP products over 1 per cent and not leave IFAs at risk who believe these products are best for their clients.”


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EEF/Jelf Employee Benefits Sickness Absence Survey 2015

EEF stated in its 2015 EEF Manifesto that the UK’s growth prospects depend on people being fit, working and productive. Keeping people in work and helping people return to work is very important for the manufacturing sector. It means boosting productivity by getting people back into work as early as is possible, as well as fostering workplace cultures and environments that proactively manage individuals’ health conditions so that all can benefit from lower sickness absence outcomes.


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