The regulator may be growing overly fond of revolutionary change
cheered on by the Treasury.
It may be planning to turn the way that insurers do business upside
down by applying the Sandler with-profits model to conventional
Discussion paper 20 could see various restrictions applied to
with-profits – particularly on investment – and, as a result, all
insurers would move to a smooth managed model. And what of the orphan
This is only a discussion paper – more a statement of intent than a
detailed strategy – but many insurers probably feel they could do
without it as the bear market tests the with-profits concept to its
IFAs should be alert to what it means for their with-profits clients
– it could mean a windfall – although surely much reduced.It could
close down traditional funds and,if botched, could weaken some of the
life offices which are weathering the storm – advisers with multi-tie
ambitions take note.
Money Marketing believes aspects of traditional with-profits are in
need of reform but that there are more pressing issues facing
insurers' managements without such a distraction. We suggest that
this particular initiative goes on the backburner for a while.
If you wanted to select a small, well-run IFA to represent the best
of the sector,you could do worse than Nick Bamford's Informed Choice.
Yet, the Sofa chairman is unable to get PI cover for his business
despite being one of the most respected pension IFAs in the UK. Small
IFAs are facing a PI crisis. The FSA should accept this.