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Stakeholder focus on divided industry

The Money Marketing Focus Stakeholder Update reveals an industry split over what constitutes material disadvantage on pension policies sold prior to stakeholder.

The Update says the FSA has avoided giving detailed guidance on the definition of material disadvantage when a client transfers into stakeholder from another style of scheme.

This has led to providers taking different approaches to the issue, with some prepared to review and compensate policyholders and others not intending to examine transfer cases at all.

Barclays Life, which is being wound up and rep laced by Legal & General later this year, says it intends to review all products sold between March 1999, when Regulatory Update 64 on material disadvantage came into effect, and April 6, when stakeholder is laun ched. It plans to compensate any policyholders affected.

But Scottish Mutual and Winterthur say that, because they do not impose transfer penalties on plans sold between March 1999 and April 6,2001, no policyholders will be hit by material disadvantage.

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