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It&#39s a new friendly world

So the Treasury has at last accepted the Office of Fair Trading&#39s arguments when the polarisation regime was first mooted – it is anti-competitive and distorts the market.

That is not the whole story. When regulatory measures to ensure a transparent market were not as far adv anced as they are today, polarisation helped to ensure that customers knew who they were dealing with and on what terms. But the cost was paid in reduction in choice, especially with regard to specialist products. Now we may have a chance to rectify that. Better late than never.

The friendly society movement has been a particular, but not the only, victim of the system. Traditional routes to market, for instance via banks and building societies which could not offer their own friendly society products, were closed while the ban on multi-tying stopped new routes from replacing them.

Affinity group marketing seemed a way forward but as soon as a worthwhile relationship was forged, the affinity group would want to offer its members a wider range of products, which would mean casting the friendly society adrift. Friendly societies believe they have a social duty but they do not necessarily see it as opening up markets for other, bigger players to get the benefit. And they are unhappy that, as a result of this, new savings are not made. Those who have lost the savings habit are not encouraged to start again and young people have to make their start in life without the nest egg which long-term savings in a friendly society children&#39s plan could have given them.

The intention now is to reconsider polarisation in two stages.

The first makes some fairly rapid changes in those areas nearest the Government&#39s heart – Isas and stakeholder pensions, for instance.

It has been clear for some time that if polarisation remained unch anged, stakeholder pensions could not take off with the velocity the Gov ernment wanted. Friendly societies have felt for a long time that the struggle against financial exclusion is being held back in other areas for the same reason. So that is good news.

But not good enough. The next stage is perhaps a year away, with consultation timetabled for 2001 – and that is where gap-filling, which really interests friendly societies, comes in.

We understand the authorities want to take things gently, testing the water with stage one and using the resultant experience to influence its approach to stage two. But the change to accommodate friendly societies is a small one. It relates to simple, transparent products which are well understood in their markets. It need not wait another year.

We are delighted to welcome the coming alterations to the polarisation regime. It is a new regulatory world and the damage caused by polarisation can be undone without harming either the consumer or the IFAs whose position the regime was intended to secure.

The sooner we can set about this, strengthening the market and widening that access to financial services which polarisation denied, the better for everybody.

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