The Investment Management Association has warned the 1 per cent cap proposed by the Sandler review for the stakeholder suite of products will not work.
In its response to the Treasury consultation on the Sandler products, the trade body says if the Government is to be successful in attracting lower earners of the market to the new product range, it has to be able to attract product providers, otherwise the products will flop.
But it has welcomed the focus on simplicity, transparency and regulation saying this would bring benefits to the industry and consumers.
IMA chief executive Richard Saunders says: “Government imposed price controls are in principle unnecessary in this area. Just as cat standard Isas had next to no impact on the market, so these products will flop if a one per cent cap is imposed. We therefore welcome the Treasury's indication that it is prepared to reconsider this.”