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Smooth move would be rough

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

with-profits.

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

assets?

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

limits.

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&#39 managements without such a distraction. We suggest that

this particular initiative goes on the backburner for a while.

Cover crisis

If you wanted to select a small, well-run IFA to represent the best

of the sector,you could do worse than Nick Bamford&#39s 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.

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