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Now FSA wants &#39why-not&#39 letters for stakeholder

IFAs may be forced to write clients “reasons why not” letters if they do

not recommend stakeholder pensions.

Intermediaries fear the FSA plan would increase the regulator&#39s powers,

effectively leading to it controlling the advice IFAs give.

The proposal was outlined by FSA conduct of business policy adviser

Richard Cockroft at a stakeholder think-tank at last week&#39s PIMS 2000


IFAs at the discussion expressed anger that their advice was being

undermined and were concerned such a move could eventually see advisers

forced to justify why they have not gone for alternative products as well

as pensions.

But Cockroft argues a letter justifying why an adviser recommends a

personal pension over stakeholder could protect advisers from potential

misselling allegations.

The proposal forms part of the FSA&#39s discussion stage on its approach to

the regulation of stakeholder business.

Cockroft says: “It is not a valid argument to say if you write reasons why

not letters for stakeholder you have to write it for everything else,

because stakeholder is a regulated product and the presumption is that it

is, on average, more fair to consumers.”

But the proposal is continuing to enrage pension advice experts. Wentworth

Rose Retirement Specialists managing director Philip Rose says: “Why-not

letters would be an extension of the nanny state, with the FSA in danger of

prescribing what advice is given.

“It totally undermines independent financial advice. The reasons why not

letter route is one with unlimited scope.”

Maddison Monetary Management managing director Mark Howard says: “TheFSA

should be promoting advice, not restricting it. There should be no reason

for a reasons why not letter. It seems ridiculous.”


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