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Warning that stakeholder scandal looms

The Government and the ind-ustry have been issued a high-level warning of

the likelihood of a stakeholder misselling scandal in a report by the

International Institute of Banking and Financial Services.

In a section called Decision Trees – Another Pensions Scandal in the

Offing?, the report states: “The risk for IFAs is that many consumers in

the core target market will avoid seeking independent advice altogether,

going instead to a tied agent.

“The risk for the consumer and the industry at large is they may buy

without advice at all, relying exclusively on the decision trees, or they

will decide not to buy at all.”

The research also predicts that appointed representatives and IFAs will

emerge as the main distributors for stakeholder as life offices which fail

to secure partnerships with banks are forced to woo alternative channels.

The report also slates life offices for the shortcomings of their

e-commerce strategies for distributing stakeholder. It says 40 per cent of

providers do not regard the internet as an integral part of their

distribution and that their websites offer little or no interactivity.

Torquil Clark pensions development manager Tom McPhail says: “This

confirms the message that the pension industry has been sending for the

last year which is that the Government has not adequately addressed the

distribution of stakeholder.

“We would like to see all employers appoint a regulated individual to

ensure employees have access to regulated advice.”


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