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Ritchie ploughs into NU&#39s guarantee

The FSA may force Norwich Union to reconsider the guarantee on its

stakeholder with-profits fund, according to Scottish Equitable pensions

development director Stewart Ritchie.

Speaking at ScotEq&#39s series of national roadshows, Ritchie argued that NU

has “ploughed a unique regu-latory furrow” which may provoke the regulator

to reconsider its approval for its stakeholder with-profits plan.

So far, only three life offices have said they are prepared to offer

with-profits under stakeholder but, to date, only NU has said that it will

be offering any guarantees. Both Standard Life and CIS have said that they

will offer with-profits but without guarantees.

Ritchie says: “These sorts of situations tend to be unst-able because if

there is merit in NU&#39s approach, why will no one else do it?

“It looks like other players have looked but shied away even though they

know that NU has regulatory approval.I think if the market takes a

different view from the regulator, then the FSA might reconsider its

position.

“Alternatively, other providers will follow NU. The question also comes

down to who will pay for these capital guarantees and, if they knew, would

they be happy about it?”

Norwich Union director of pensions development Jerry Barnfield says: “I

would not anticipate that we would rec-onsider what we have done and we

would not anticipate the regulator changing anything. We decided the

guarantee is something that IFAs and consumers will expect from the product.

“We do expect others to look again at their approach now they have seen

how NU has done it.”

DOCE:

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