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FSA will fine IFAs for endowment blunders

IFAs face fines or suspension for administration blunders which led them

to give bad advice over endowments.

FSA financial supervision directorate managing director Michael Foot said

product providers and intermediaries were guilty of “poor record-keeping”

and their practices had given rise to endowmentmisselling.

He said: “Some firms will be disciplined as a result.”

Foot, speaking at an Institute of Economic Affairs conference, Life

Assurance 2000, in London this week, refused to reveal the scale of the

admin problem, which also applies to FSAVCs.

He said the regulator would be “showing its experience in aggregate soon”,

including where the gaps in the records were occurring.

The news has renewed fears of a damaging and costly full-scale endowment

review.

Foot believes the admin blunders will stop whenmortgage regulation comes

in later in the year.

Some five million UK homeowners have endowment policies. They are

currently receiving letters from their providers on how to deal with

possible shortfalls.

The letters are thelatest phase of the FSA&#39sinquiry into the mortgage

product. It was prompted by consumer concerns that policies were

underperforming.

Foot also unveiled plans for an annual summit between practitioners and

trade and consumer associations, designed to head off potential scandals.

He says past difficulties have been slow to emerge and the industry has

been slow to respond.

The first meeting will be held in September.

Foot said: “Poor record-keeping has led to poor advice and a threat to

consumer protection, especially in the case of endowments.”

Sofa spokesman Robert Reid says: “I would not be surprised to see an

in-depth analysis of the whole area. They never ruled out a review of

endowments.”

l The BBC flagship documentary programme Panorama is due to investigate

endowments in The Mortgage Timebomb, scheduled for screening next Monday.

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Guide: how to… communicate with your pension members

Effective communication of your pension scheme is a large part of getting auto-enrolment right. Delivering the same message to all employees is not necessarily the way to go. To assist you with the communication of your pension scheme, we have provided some key areas to think about, such as:

  • What to consider when segmenting your workforce
  • How to communicate to pension scheme members at the right time in their member lifecycle
  • What topics you should be discussing with your pension members
  • The new pension freedoms and the importance of communicating them

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