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The walls come tumbling down

A few months ago you pub-lished a very erudite letter from Graham Worrall of Dundee on the subject of the damage which will be inflicted on the UK financial services industry by Government-imposed charge capping, particularly on pension products.

As most IFAs will doubtless have noticed, the horrible sticky mess predicted has already started – and with alarming rapidity.

So utterly desperate is the battle to reach critical mass in the stakeholder market that those life offices which have decided to commit to this contest of elimination are sacrificing just about everything else to achieve their aim.

In the case of Standard Life, for example, if it doesn&#39t make it big in the stakeholder arena then demutualisation will be an unavoidable outcome. What else does Standard Life have to sell in volume?

Friends Provident is obviously of a similar view. The local office has made it abundantly clear to me (without actually spelling it out) that it has no interest at all in any IFA who is not bringing in group personal pension schemes by the boatload. Our “broker consultant” is now on the end of the telephone in Manchester – 160 miles away.

Clerical Medical is treading more warily. Its leaflet for existing personal pension holders – We are improving our personal pension charges – makes for interesting reading.

It lists all the reasons why existing PP holders should think twice about switching to a (Clerical Medical, of course) stakeholder PP. These include no life cover, no waiver cover, access to an inferior range of investment funds, no access to with-profits, the loss of existing with-profits guarantees (which will not be transferable) and even the loss of valuable loyalty bonus entitlements.

Apart from these few small points, though, Clerical Medical is evidently totally committed to stakeholder and all the great opportunities for the future it represents.

The walls are going to start crumbling more quickly than you may all have imagined.

Julian Stevens

Partner, WDS Independent Financial Advisers, Kingswood, Bristol

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