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FSA sets out ’emerging threats’

Payment protection insurance, child trust funds, mortgage disclosure documents and venture capital trusts have all been included in a new list of emerging retail risks drawn up by the FSA.

In what it says is an unprecedented move, the regulator has published the main product-related risks that its retail markets busin- ess unit will target this year, how they are identified and how it will address them.

The threats identified by the FSA include contracting out of the state second pension, the child trust fund, variable interest rates, income withdrawal after age 75 under pensions simplification and distribution bonds.

The FSA says it uses a combination of sources to identify emerging retail risks, including market data, sales levels of products, financial promotion and discussions with firms.

The regulator will hold talks with firms selling the products on its hit list and conduct mystery shopping this summer with certain providers to gather any evidence of misselling for a report this year.

FSA spokesman Robin Gordon-Walker says, “Prevention is better than cure. Like we did with VCTs earlier this year, we are trying to pick up these threats early. At the moment we have may have some anecdotal evidence of risks but we do not have as much evidence as we need. We will report back on the results in due course.”

Aifa director general David Severn warns that the regulator could create panic in the market and scare off investors. He says: “The FSA is treading a fine line here because you can create risks with any financial product. The FSA should not create unnecessary fear in the market because this could put people off investing.”


ABI is not backing compulsion for pensions

The headline and first para-graph of the article, ABI disappointment as Labour seems to rule out compulsion (Money Marketing, April 14), gives the misleading impression that the Association of British Insurers has undergone some sort of Damascene conversion and is now in favour of compulsion for individual pension savings.

Woolwich explores the fast lane

Woolwich Plan Managers accelerated growth plan issue 6 is a FTSE 100 linked capital-protected bond available with a six-year or three-year term.

PFS is simply an irrelevance

I have all due respect for Harry Katz’s prowess as an industry commentator and fellow contributor to these pages but I do wonder whether or not there is any point to what seems to be his ongoing feud with John Ellis over the purpose or relevance of the Personal Finance Society, as the LIA and the Sofa have now become.


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