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You haven&#39t given trees a chance, says FSA&#39s Severn

Stakeholder pension decision trees cannot be written off as a failure just because most of the industry has chosen not to use them, according to the FSA.

Writing in this week&#39s issue of Money Marketing, FSA head of retail projects David Severn says that although, “on the whole”, the industry has opted not to employ decision trees, they are still effective for the job for which they were designed.

Severn has also denied that decision trees were ever meant to gauge suitability and he claims they are aimed at “screening out those consumers who are either ineligible or were likely to suffer detriment if they purchased”.

He has conceded that misbuying would remain a possibility if decision trees were used to sell the Sandler suite of products but says any detriment caused would be counterbalanced by the product standards.

Severn said: “The industry view that they have been a &#39failure&#39 in the case of stakeholder pensions is simply based on the fact that on the whole the industry has chosen not to use them, rather than that the trees fail to do the job for which they were designed, which was never to gauge suitability.”

Pensions & Investments Management principal Phil Moore says: “Is the failure of decision trees due to the intransigence of IFAs or is it something wider such as the fact that decision trees are a complete waste of time? It seems to me that the FSA is trying to defend what they have already decided.”

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