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McFall’s churn salvo

Treasury select committee chairman John McFall believes FSA chairman Callum McCarthy’s scathing attack on churning shows the Government and industry needs to act on the distribution modelAt a Standard Life fringe event, McFall said the committee’s report on financial inclusion, due in October, will address churning and its effect.

He was glad the FSA was addressing this “root cause” of failings and described commission as incentives that benefit neither consumers nor providers. He said as long as providers compete on commission, the flaws will remain.

McFall praised the regulator in “pulling along” the industry through treating customers fairly and the warning shot from McCarthy.

He said the Government should consider an industry levy for financial capability projects as the FSA resources were “chickenfeed”.

McFall said: “Here we have an industry that is churning its way around. It is not getting to the saver and it is certainly not getting to the right people. There are messages there for the industry and there are messages for the Government that financial inclusion in its wider sense has a long way to go.”

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