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Michael Both

It&#39s official – the lunatics are in charge of the asylum.

Having spent more than 10 years raising standards so high that only a weightlifter can carry a key features document, illustration and reasons-why letter at the same time, apparently anyone will be able to sell anything to anyone in future – so long as they are not an IFA.

There is not enough competition for financial services, which is allegedly why we need to scrap polarisation and have fewer firms badging each others&#39 products as their own.

In Tony Blair&#39s vision of a land fit for heroes (that is, free of IFAs), stakeholder is so attractive that plan managers do not need to waste money on anything as old economy as distribution. Good news, then, for Prudential and Sun Life Financial – unless, of course, you happen to be one of the 5,000-odd staff made redundant as a result.

Still, at least Standard Life&#39s stakeholder has got the stamp of approval. Quite a lot, in fact, now that it sees its main distribution arm as the Post Office. Its 0.4 per cent guaranteed bonus rate on with-profits will clearly mean a secure retirement is assured, with absolutely no need for nasty, expensive advice.

There is certainly no need to get advice from anyone with a raft of letters after their name to show they have passed very testing exams to prove they are qualified to give independent financial advice tailored to their client&#39s individual circumstances and will be legally liable for it, no matter what happens in the future, when the regulatory framework has changed beyond recognition.

There is further good news for IFAs, who can easily avoid the burden of collecting pennies of commission for hours spent discussing stakeholder. Just ask your clients to double-check something on the decision tree with the insurance company direct and problem solved. No moral hazard at all.

Wasn&#39t it a shame the DSS&#39s TV ad ran out of film before the dogs showed what they really thought of the new pension options on that lonely rural signpost. In future, it will not be dog mess on the pavement, it will be an important message from a trusted Government spokesperson for you to take home on your shoe.

Employers, who were looking for something less productive to do when not complying with the miles of red tape they already have to negotiate in their day jobs, will thank Blair for giving them the opportunity of paying a £50,000 fine if they do not also accept the added burden of administering a stakeholder scheme for their staff.

Actuaries are calculating the life expectancy of the bubbles in their fizzy water now they have saved final-salary schemes the iniquity of the minimum funding requirement. Now that, at least, is unmitigated good news for pensioners. After all, what sane employer would not want to give up the certain knowledge that, if they met minimum funding requirements, there was no further liability if assets did not perform, for the infinitely preferable total uncertainty of having to make up any shortfall out of current profits.

It must be so tiring being a Government minister, receiving all that mail congratulating you on the vital job of overseeing the financial strength of firms such as Equitable Life. Oh yes, we can all sleep soundly in our cardboard boxes. Clearly, there is absolutely no connection with the massive discrediting of the entire British financial services industry and plummeting savings ratio. To draw that conclusion would just be plain silly.

Michael Both is proprietor of Michael Philips


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