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Fund firms won&#39t fare well if the 1% cap is extended

It is rare that a trade association leaps to the defence of the Government but that is just what Autif has done over stakeholder.

Autif&#39s director general Philip Warland has hit out at his ABI equivalent, Mary Francis, for criticising the Government&#39s involvement in the product&#39s design.

The division of opinion is hardly surprising. The fund management industry has received concessions over Individual Pension Accounts and avoided much ofthe flak directed at life offices.

On the other hand, Francis&#39 intervention against the Government comes after four years of reverses for her membership, not least in the finalised stakeholder plans.

Warland is right in saying the Government is justified in interfering in the pension industry, given the scale of misselling and loss of public confidence.

But the manner in which the Government has chosen to intervene may only add to the public&#39s woes.

Warland is wrong to accept the very dangerous precedent of price controls,a message reinforced by the fact that most of Autif&#39s own membership feel unable to offer IPAs within stakeholder.

The 1 per cent imposition is a dramatic over-reaction, similar to the Pensions Act brought in to prevent a repeat of the Maxwell scandal but which has depleted occupational pensions&#39 reserves. With stakeholder, the Government may be about to do it all over again in the retail market.

Life offices may be bearing the brunt of Government displeasure but if the 1 per cent diktat is extended, it will help no financial services organisation and that includes fund management companies.


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White paper — In Focus: Ebola Virus Disease

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