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Thoresen says FSA must give incentives to stop churning

‘Reward well-run businesses which safeguard customers’

Aegon chief executive Otto Thoresen says the FSA must be prepared to deliver rewards for well-run businesses if it is going to solve the industry’s problems with churning.

He says the FSA, whose chief executive Sir Callum McCarthy recently attacked the damaging “merry-go-round” of commission, should look at how it can encourage advisers and providers to change their ways.

Thoresen agrees with McCar- thy’s assessment that the industry needs to find a new supply chain model to serve consumers better and says he hopes it will galvanise the industry into making improvements. But he says the regulator should be more proactive in focusing the industry’s efforts.

He says the FSA should look closely at how its principlebased regime can be used creatively to offer lighter-touch regulation to firms operating a well-run business model.

Thoresen says tackling the supply side on its own will not have a significant impact and lasting progress will only be made by giving more atten- tion to areas such as financial capability.

He says the FSA’s current commitment of 20m to the issue is not enough and more is required from the industry and Government in terms of funding and making sure money is spent wisely.

He says the work needs to produce wider public acceptance that advice has a value and should be paid for, whether through commission or fees.

Thoresen says: “Sir Callum must be prepared to put the regulatory model on the table at the same time so we can look for regimes which reward well-run businesses and new models which safeguard customers.”

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