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Life offices slam Opra on multi default funds

Life offices are claiming an oversight by Opra unwittingly hands some

stakeholder prov-iders an “unfair advantage” and could open employers up to

misadvice liabilities.

This week it is revealed that the regulator has allowed some providers to

offer more than one default fund on stakeholder schemes although many

providers had believed they were only allowed to register one default fund.

It is feared that life offices which offer only one default fund may lose

out on big schemes because they cannot make it to the beauty parade stage.

Stakeholder regulations say members cannot be forced to make an investment

choice, which means every stakeholder scheme is required to have a default

option which has to register with Opra.

But it is understood that there has been demand from bigger national IFAs

to have bespoke default options for bigger sch-emes and some providers have

got round the problem by offering up to 30 default funds.

Friends Provident manager (pensions research and development) Chris

Bellers says: “This looks as if some pro-viders are achieving an unfair

advantage. IFAs will be called upon to offer added value advice in these

situations or employers might be liable.”

Norwich Union director of pension development Jerry Barnfield says: “We

are looking for pragmatic ways of delivering a solution to the problem

without an undue bureaucracy with Opra or confusing consumers and IFAs.”

Opra communications manager Nick Edmans says: “Providers are free to

change their product design. The law only requires one default but does not

prevent multiple defaults. No one has been misinformed.”

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