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PwC survey backs cut in regulator’s projection rates

The FSA is considering cutting the projection rates firms are required to use when marketing retail investment products which do not fall within the scope of Mifid.

Under current FSA rules, the intermediate rate of return projection which pension and life product providers are required to publish in their marketing material is 7 per cent. Firms are also required to publish growth rates 2 per cent either side of the central estimate.

An independent review of the projection rates, carried out by PricewaterhouseCoopers and published this week, suggests the intermediate figure should be cut to between 5.25 per cent and 6.5 per cent.

FSA head of investments policy Peter Smith says: “It is crucial that projection rates are set at a realistic level so that investors are not misled. The independent research indicates that our maximum projection rates should be reduced.

“We are seeking views on the range of rates so investors receive a reasonable indication of what they can expect from their investment.”
AJ Bell marketing director Billy Mackay says: “Illustrations are fine when you are comparing charges but they are not useful as an indication of what an investor is going to get when they retire.

“At the moment we provide investors pages and pages of numbers which are meaningless and confusing to your average retail investor. The industry and the FSA have to come up with a more simple way of providing people with an estimate of what they will get when they retire.”



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Moody’s puts Man Group on review for potential downgrade

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FTSE 100 slides on US jobs data

The FTSE 100 has fallen by almost 1.5 per cent on the back of below-par job figures in the US and mixed trade figures from China. At 16.21, the blue-chip index was down 1.46 per cent to stand at 5640.24. The U.S. Labor Department said on April 6 that employers added 120,000 jobs in March. […]

DAs lose the case for cash

Paul Thomas reports that lenders are rethinking their distribution strategies in light of the FSA’s new stance and directly authorised firms could suffer


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