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Pass warns IFAs over FSA windfall confusion

The Pension Advisers&#39 Support System is warning IFAs about confusion over what constitutes a windfall benefit in the absence of a definition from the FSA.

Pass says after the judgment on the Needler Finan-cial Services Taber pension review test case, the FSA indicated that windfalls will cover more than demutualisation bonuses and could also include benefits from the likes of accelerated distribution of orphan assets.

It is concerned the FSA has not since clarified what windfall benefits are, saying this has “serious implications for the progress of the pension and FSAVC reviews” and it is joining with bodies such as the ABI to look at the issue.

The FSA is set to consult on the issue but is unlikely to reach a decision until May next year, which Pass says leaves firms with little time to meet deadlines for completing reviews, especially the June 30 deadline on pension cases.

It is advising IFAs to continue gathering data for all cases and to keep PI insurers informed at all stages.

Pass chief executive Mark Paton says: “This has generated uncertainty and, before proceeding with cases, IFAs should look at any potential for windfalls.”

FSA spokeswoman Jackie Blyth says: “We will be consulting on the definition of windfall and have issued a regulatory update on the treatment of windfall benefits.”

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