The Treasury has delayed its decision on the proposed price cap for stakeholder products after FSA research has revealed that more work was needed on proposals for a simplified sales regime.
The Government says it will not make a decision on the cap until next year to ensure that the sales regime and product design can be taken forward at the same time.
When an announcement is made, the Government will publish B&W Deloitte research investigating the effects on the stakeholder market of different charging structures and a consultation paper, including the cap, on non-pension stakeholder products.
In a bid to remove the barriers between different investments, the Treasury is also allowing all Sandler medium-term stakeholder products – the unit-linked, unit-linked insurance and smoothed elements – into the stocks and shares components of Isas from April 2005.
As stakeholder products will come in either life insurance or collective investment scheme form, this will remove the need for a separate £1,000 Isa insurance component, which will cease to exist.
According to the Treasury, investors can therefore subscribe up to £7,000 in a maxi Isa in 2005/2006 and £5,000 a year thereafter in a wider range of products, including stocks and shares, medium-term stakeholder, life insurance and Ucits.
M&G managing director Phil Wagstaff says: “Having postponed the decision on the cap, we are hopeful that the Treasury will now review it. It will be very difficult to cover the costs of advice, manufacturing and distribution within it.”