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Is another Treasury error in the making?

The Treasury may be about to repeat history over the 1 per cent stakeholder pension price cap but this time as farce.

The fact that Nationwide is receptive to providing Sandler products at 1 per cent may provide the excuse. The building society&#39s perceived willingness was put to other providers at a meeting two weeks ago by financial secretary Ruth Kelly with the question, if they can do it, why can&#39t you?

A repeat of the classic stakeholder error is on the cards because if one or two businesses say they can deliver, it is assumed that the whole marketplace can. But one or two keen advocates and tens of reluctant participants does not make for a successful product launch while second time around, this level of participation will shrink dramatically.

Perhaps it was naive to believe the Government would be brave enough to raise the price cap – most ministers won&#39t even begin to accept that stakeholder has failed – a case of believing their own propaganda.

But the latest research is that one million more people are relying on the state and not on their own provision since Labour&#39s election. That is a failure in anyone&#39s language. Even the Government&#39s challenge is spurious. Nationwide&#39s support depends on a low-level advice sales regime. Its creation in the teeth of FSA opposition is by no means definite.

The ABI&#39s response gets to the heart of the matter. How can you create these products when the regulator and Government are at odds? Who are they aimed at and why doesn&#39t the Government start with the customer&#39s needs first?

It is bad enough not to learn the mistakes of history but not to learn the mistakes of your own administration seems 10 times worse. We hope the Treasury sees reason but fear it will not.

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