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Tories and trade union fight cap

The Government is coming under attack from left and right on the 1 per cent charging cap, with financial services trade union Amicus claiming the cap is leading to job losses and the Conservatives saying it is increasing the pressure on a beleaguered industry.

The union met the all-party financial services group last week to lobby MPs on the issue. Amicus estimates that over 8,000 jobs have been lost in the life sector over the year – 2,600 last week alone – and fears that more jobs could be moved overseas.

It has also led many leading life companies to state that they might not offer the proposed Sandler suite products which would see an extension of the 1 per cent price cap.

The Tories claim that the price cap is putting unnecessary pressure on life offices which are already feeling the squeeze from the downturn in the stockmarkets.

Amicus research officer Ciaran Naidoo says: “As a result of the 1 per cent cap there have been a number of job losses. We think it is more realistic to increase the price cap to take the pressure off life companies and lead to greater employment security. We are very worried about the trend to move operations offshore.”

Tory Shadow paymaster general Stephen O&#39Brien says: “The 1 per cent cap is unattractive for the industry where the return on effort and the recovery of costs need to be rooted in reality.

“In what is already a very pressurised sector, the 1 per cent products – contrary to the Government&#39s claims – are not looking anything like a growth sector.”

Financial Technology Research Centre director Ian McKenna says: “You cannot have jobs in the levels there have been and have a 1 per cent world.”

A Treasury spokesman says: “Staffing levels are a matter for companies. The 1 per cent price cap has acted as a driver of competition in financial services.”

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