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PIA shifts review bill from life offices to IFAs

IFAs face paying the lion&#39s share of the £80m redress in phase two pension review recalculated transfer cases after new PIA proposals shifted the burden from life offices to advisers.

The move, detailed in PIA consultation 35 published this week, follows lobbying by life offices, rejecting previous plans demanding they meet 85 per cent of the recalculated compensation to policyholders.

The move leaves IFAs meeting the costs on a case-by-case basis but the regulator has confirmed the burden will shift towards the adviser from the provider under the latest proposals.

Aifa has attacked the PIA plan, claiming the proposals do not allay IFA fears that it has set a precedent of stinging IFAs for extra redress by using the newer calculation basis retrospectively.

IFAs used the regulatory guidance which was correct before December 17, 1999 but which was changed afterwards. The issue affects around 25,000 cases.

FSA spokeswoman Jackie Blyth says: “IFA firms will not be expected to meet any of the administrative costs and, although it will vary case by case, IFAs will be expected to meet more of the costs than under the previous proposals.”

Aifa director of public affairs Tracey Mullins says: “The industry has lost confidence in the regulator over this and we are still waiting for formal reassurance that this has not set a precedent. We will continue our discussions to see if the position of IFAs can be improved.”


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