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's 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's 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
“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.”