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Warning that reviews flood will sink savings confidence

The head of the financial services practitioner panel is warning the Treasury and the FSA that the consequence of the present multitude of reviews could be damage to the economy and savings confidence.

Panel chairman Donald Brydon says too many reviews could distract management at a time when the industry is already being squeezed by falling equity markets.

He is calling for the conclusions of all the reviews to be considered together and warns that failure to take an overall view of the reviews could lead to industry confusion.

There are currently 10 rev-iews of the industry, including the Baird report, the Penrose inquiry and the Parliamentary Ombudsman review looking at Equitable Life. The Treasury has commissioned the Sandler review, the Pickering review and the Myners review.

The FSA has generated the depolarisation proposals, the Tiner review of insurance reguilation and the with-profits review. The Inland Revenue and the Department of Work and Pensions have instigated the review of the modernisation of annuities.

Brydon warns that the conclusions of these reports must be considered in relation to each other and says the cascade of reviews risks creating uncertainty among savers and stretching the resources of advisers.

He says: “There can surely be no other country which has subjected its savings industries to so many interlocking inquiries. The conclusions of all this study need to be considered together. If either the Treasury or the FSA act precipitately in relation to any one of these enquiries, they risk creating a jigsaw into which the final pieces may not fit.

“There is a risk that the law of unintended consequences may become operative rapidly, with resulting damage to the economy and confidence of savers.”


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