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Life offices lose plea to add Serps onus on IFAs

The PIA has rejected calls from life offices to reconsider proposals on meeting the cost of recalculated redress on Serps transfers in phase two of the pension review which product providers felt were too generous to IFAs.

The method of meeting the additional cash to policyholders who are entitled to recalculated redress, estimated at up to £80m, was detailed in PIA consultation 35 in August. Plans for an 85 per cent of costs to life offices versus a 15 per cent proportion to be met by IFA firms were greeted with anger by product providers.

Life offices felt that IFA firms&#39 PI insurance should help meet the costs and considered that they ought to absorb more than 15 per cent of the extra redress.

IFAs used regulatory guidance on the affected cases which was correct at the time before December 17, 1999, which was later corrected.

The redress issue affects around 25,000 cases and the average amount of extra redress owed per client is around £3,200.

FSA head of pensions unit Chris Rexworthy says: “Life offices were not happy with the 85/15 split but this has been maintained with the addition of calculating the special levy on firms which takes into consideration the PI cover for firms.”

Aifa director of public affairs Tracey Mullins says: “We still maintain that it is wrong in principle that cases are reopened.

“We will be examining the proposals in detail to see how workable they are for IFAs.”


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