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PIA may issue warning over FSAVC advice

The PIA may issue a warning to IFAs and pension schemes about top-up pension plans, following fears that they are being missold.

The move follows a growing storm of controversy over whether IFAs are misselling free-standing additional voluntary contributions to scheme members.

Schemes including Sainsbury and British Airways claim that as many as 10 per cent of their members are taking out FSAVCs instead of the in-house AVC.

The PIA feels that schemes are failing to publicise their in-house additional voluntary contribution plans to members. But the PIA has ruled out a major review of the market, claiming that nothing has changed since it issued guidelines in 1996.

However, the growing row between IFAs, life offices and pension schemes could force the regulator to take action.

PIA head of press Sarah Modlock says: "We are reviewing the market all the time. But this time we have had people making a lot of noises.

"We may need to remind IFAs that they need to talk about scheme AVCs. The problem is also one for the schemes.

"In-house publicity is essential and schemes must be aware of this."

Life offices believe it may be time for the PIA to issue new guidelines on FSAVCs and AVCs.

Standard Life pensions marketing manager Andrew Black says: "It would make sense if the PIA look at their guidelines again. There is obviously concern and perhaps the guidelines can be improved."

Life offices have struck back at the schemes which have raised misselling fears, claiming that many people use FSAVCs, despite the extra cost, because they are more flexible.

Scottish Life marketing manager Alasdair Buchanan says: "There are many reasons why an FSAVC is better than an AVC. It is all about flexibility and it is not just about charges."

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