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Sandler attacks industry failure to motivate savers

The financial services industry must not view the prospect of pension compulsion as a redemption for its own failure to create demand for its savings products, warned Ron Sandler.

In explaining why the compulsion issue was only touched upon in his report in July, Sandler told delegates at the CII conference that the industry has much more to do to motivate savers.

He said if the Government was to introduce compulsion, it would serve as a bailout to an industry which has largely been uninterested in its customers and largely uninterested in creating demand for its products.

Sandler said another reason why the report shied away from recommending compulsion was that it could actually damage the savings ratio if the level of compulsion was set too low.

He said if the Government established a mandatory level of savings, it would be seen by the public as the necessary amount to save and those saving more might reduce their investments.

“I do not think an industry that has not been particularly interested in its customers should be redeemed by the Government introducing compulsion,” he said.

“The industry has a great deal more it can do to advance demand for its products. Simply allowing the Government to compel people as a solution to the demand inadequacy does not put enough responsibility on the industry.”

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