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Regulator in bunker on non-toxic sales

Scaled-back regulation for non-toxic product advice is unlik- ely to be accepted by the FSA due to its “bunker mentality”, warns Labour MP Andy Love.

Panel members were asked to consider if it would be possible to introduce a form of “non-toxic” insurance and savings products subject to lighter-touch regulation to help vulnerable consumers.

But Love said: “There is already a quite significant bunker mentality developing at the FSA over recent difficulties, some of which it has taken on the chin. Combine that with the fact the slowdown is undoubtedly going to throw up real difficulties that the FSA is going to be in line to take some responsibility for and some of the things suggested, which are highly laudable, are unlikely to meet with a positive response from the FSA.”

Bankhall chief executive Peter Mann said: “It was tried in the early stages of the RDR and fell on the sword of the Financial Ombudsman Service. Trying to get the Fos to agree there is a type of product that is sufficiently non-toxic to avoid retrospective regulatory action was quite difficult.”

Aegon UK chief executive Otto Thoresen said: “I do not think we should give up on this but it requires a willingness to persevere through some of the criticism that is likely to come in the early stages.”

CBK principal Peter Chadborn said: “One of the difficulties in addressing the needs of vulnerable consumers is how do you get them sitting in front of an adviser. With protection, there is not much consumer awareness of the need for the product.”

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