The 1 per cent price cap is officially under review, a Trea-sury spokesman has confirmed, and the Government is consulting on the future of product charges.
Responding to arguments from IFAs and providers that 1 per cent is uneconomical and should not be extended, the spokesman says the cap is a good starting place for consultation.
The industry has argued against extending the 1 per cent cap to Sandler's proposed “stakeholder” products, saying it would be unworkable because it does not allow for marketing and distribution, but the Government has always stated that the price cap allows a sufficient margin for the industry to operate.
In its report, the Sandler review team said that while a 1 per cent cap is suitable for its proposed products, it should be reviewed at regular intervals to ensure that it remains appropriate.
Industry sources say that while it did not appear in the report, the Sandler review team has privately said that the price cap should be rev-iewed before the products are implemented.
The Treasury spokesman says: “One per cent is the right starting point for consultation.”
Aifa director of public aff-airs Tracey Mullins says: “We would welcome any positive move by the Treasury that it is entering into that discussion. Ron Sandler was wrong on this point, the price cap should be moved now, not later.”