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They think it&#39s all over…

While they may not have been as widely followed as England&#39s progress in Japan, the Pickering and Sandler reviews are being tracked just as closely by those in the financial services industry. Between them, they have the potential to turn pensions, savings and financial advice upside down and further unsettle the life of financial advisers.

Still reeling from the impact of CP121&#39s proposals on depolarisation, financial advisers could be thrown into yet more turmoil by Ron Sandler&#39s likely suggested reforms to commission. Despite Alan Pickering&#39s remit to simplify pension regulations, any changes he suggests are going to add at least in part to the feeling of upheaval that the pension industry has endured since stakeholder pensions were first suggested by the Government in its pension Green Paper in December 1998.

However, press speculation suggests that both Pickering and Sandler will soon be publishing their reports, finally calming the unease within the financial services industry.

Considering the hurricane of change that has stormed through an area previously thought too dull or confusing for any reforming administration – and especially a Labour one – to bother with, could the windswept IFA be blamed for thinking it&#39s all over?

As is standard procedure for any review of this kind, the Government will either publish its response at the same time as it publishes the review&#39s findings or it may invite further comments from the public and industry on the report and then publish its thoughts.

Then there is always the prospect of one of the recommendations of the review team being the need for further research and investigation, leading to the establishment of another review.

For an idea of how long this could take, cast your minds back to March 2000. If it feels to you as if Sandler&#39s team have been investigating long-term savings for ever, his review was one of the recommendations of Paul Myners&#39 review into institutional investment, first announced in Chancellor Gordon Brown&#39s 2000 Budget and reporting a year later in March 2001. That is over two years of continuous review.

To continue the footballing analogy, Kevin Keegan&#39s England had not yet been eliminated from the Euro 2000 competition, let alone appointed a new manager and qualified for Japan and Korea.

Even if further investigation is not required, officials indicate that the Government is unlikely to make public its concrete proposals on Pickering and Sandler until the autumn. It may be that these can be implemented through simple changes of regulations and the use of secondary legislation. This, however, may still require the laying of a statutory instrument before the House, which can be consulted upon and possibly contested by the Opposition although, given this Government&#39s majority, that should not delay the changes for too long.

Any more far-reaching reforms or, in the case of Pickering&#39s original objective, the abolition and consolidation of existing laws and regulations, may require primary legislation.

If new Work and Pensions Secretary Andrew Smith successfully negotiates his way through the Cabinet committee that decides which bills make it into the Queen&#39s Speech in November, then these may be introduced into the next Parliamentary session. This would see the law changed some time after 2003-04. If other Government priorities take precedence, such as a bill to pave the way for a euro referendum some time in late 2003, then we are talking about an even longer wait for any proposed changes to pensions or financial advice.

However, the dazed pension industry would be unwise to hang its hopes on that being the end of the process of financial services reform. There is a third pension review going on, covering the taxation of pension schemes and being conducted jointly by civil servants from the Inland Revenue and representatives from the National Association of Pension Funds.

Although current thinking is that its report will be bundled in with Pickering and Sandler, it will inevitably make its own contribution, adding to the changes recommended by those papers.

The Government is still to inform us of its final thoughts on the future of annuities. Since the publication of Modernising Annuities in February, we have learnt that we should not expect far-reaching change to the rules, such as the compulsory purchase of annuities at 75, but perhaps more modest changes to increase the use of the open-market option and place greater emphasis on consumer understanding and choice.

Then there is the FSA&#39s current consultation on changes to the rules governing pension projections, not to be confused with the recent publication of guidelines for money-purchase pension illustrations.

There are also strong indications that this autumn will see a DWP review of how the first 18 months of stakeholder pensions have gone and please do not forget the European occupational pension review which rumbles on.

IFAs not focused on pensions, beware. Responses to CP121 are under consideration by the FSA and Treasury, which will give its thoughts in due course. Although Sandler&#39s report will impact on the nature of the future regime within which advisers operate, the post-polarisation landscape is expected to be pretty much as set out in CP121.

All in all, this summer&#39s publication of the long-awaited reviews will not signal the end or even the beginning of the end of political and regulatory interest in reforming financial services.

IFAs cannot afford to take their eye off the reform game just yet. We could find ourselves halfway through the next World Cup before we can finally say: “…It is now.”

Ilan Jacobs is a director of Consolidated Communications


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