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.”