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Regulator admits stakeholder may squeeze out IFAs

IFAs may be squeezed out of selling stakeholder as further consolidation results in increasingly remote distribution channels, admits the FSA.

In its Women and Personal Finance report published last week, the regulator says the 1 per cent cap will mean firms “will find it difficult to maintain expensive distribution structures such as company representatives and IFAs”.

It says consolidation will lead to a “much smaller number of much larger providers” which could lead to a lack of choice and access.

The report was prepared by FSA consumer division director Christine Farnish with industry representatives. It says stakeholder&#39s target audience and women value face-to-face contact with advisers but increased remote distribution could deny them access. Women are more likely to see an IFA than men but only 22 per cent of women have a pension compared with 40 per cent of men.

The report says: “It may be those companies with access to large customer bases that are best placed to benefit.

“The growth of plcs may lead to more cherrypicking of high-net-worth customers just at the time when products such as stakeholder are targeted at the mass market.”

Aifa director general Paul Smee says: “I think the FSA should be careful of entering this territory. I hope this is not what they are regulating for.”

Holden Meehan director Richard Hunter says: “I am glad to see the FSA focusing on these problems but this is closing the stable door after the horse has bolted.”

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