View more on these topics

Reasons why not letter encroaches on IFA territory

The stakeholder pension may not be compulsory for the public to buy but the FSA is determined to make it as good as compulsory for IFAs to sell.

The high-flying directors of the FSA must realise the stakeholder pension is not infallible. But in consultation paper 61, the proposed reasons why not letter looks set to be worded as if the pension can miraculously meet virtually all the UK&#39s retirement needs. In the process, the regulator is considering unprecedented interference in the way IFAs advise their clients.

In recent months, one of the most pressing questions about stakeholder pensions was how much of a personal pension market could exist outside the Government&#39s strict kitemarked regime.

It was widely thought that those who chose to seek advice by paying more, who wanted access to packaged insurance cover or greater investment choice could opt for a personal non-kitemarked pension. This risked busting the 1 per cent charges dictat but clients would have had the choice.

But life offices believe the reasons why not letters come close to forcing IFAs into the “confession” that stakeholder is best. Stakeholder has brought downward pressure on pension prices and the pension itself will be appropriate for some people but there are a dozen reasons why it may not be the best option for everyone. But backing a prescriptive pension with prescriptive regulation risks forcing IFAs into false confessions.

The FSA must be very careful that, in trying to avert misselling of personal pensions, it does not encourage IFAs to missell stakeholder instead.

Recommended

Julian Gibbs

Standard Life is being typically cautious in that it is only offering an initial reversionary bonus of 4.5 per cent with a terminal bonus from day two which is, as yet, of unknown quantity. Furthermore, it is stating that, while there are no early surrender penalties, it reserves the right to apply what other companies […]

Steve Burgess

The content of stakeholder decision trees will be prescribed by the FSA, with product providers and financial advisers at liberty to personalise the presentation by using their own brand, amending the projection figures (to reflect an annual charge lower than 1per cent or a different retirement date) or changing the format.However, decision trees cannot be […]

Future Mortgages offers discounts on sub-prime loans

Future Mortgages is offering discounts for the first time.The sub-prime lender is featuring a 1 per cent discount on its Future 85 and Future 80 products.It claims the discount is a “pure giveaway” and says it will continue to pay competitive procuration fees.Future 85 offers unlimited capital-raising for any purpose and the ability to self-certify […]

IPA is brewing up to a bitter start

Pension providers are placing IPA plans on the back-burner while focusing on getting stakeholder products up and running by April 2001.Although the Govern-ment has scheduled the launch of IPAs to coincide with stakeholder, the industry is spending the next seven months concentrating its efforts on existing plans for stakeholder rather than developing a new product.Scottish […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com