The City regulator yesterday said it was putting off a decision on part of the second phase of the pensions review, which is designed to clear up the pounds 15bn mis-selling scandal.
Phase two of the review is designed to look at 1.5 million "non-priority" cases of younger people who may have been mis-sold a pension. The first phase, which encompassed 600,000 people who had retired or died since being mis-sold, is due to end this year. The FSA now appears to be backing away from demanding that life insurers fully review a whole tranche of "rebate-only personal pensions" sold to young people.
Steve Muir, a pensions expert with Axa Sun Life, said: "What the industry's arguing is that we are talking about a very, very small number of people with rebate-only pensions who fall into the category where they may have been mis-sold. We can get carried away with this, trying to be whiter than white."
The rebate-only pensions were sold to people who wanted a personal pension rather than being in Serps, the state-run second pension. Rather than paying national insurance for Serps, over 3 million customers have opted to have a national insurance rebate paid into a personal pension.
But life insurers complained that only a tiny fraction of these cases were connected to the real mis-selling problem of taking a personal pension instead of an employer's scheme.
The misselling debacle is becoming increasingly costly to financial services companies. Hogg Robinson, one of the country's biggest financial advisers, yesterday revealed it had set aside pounds 10m to compensate victims of misselling. This is believed to have doubled since Phase Two of the review was announced.
Lincoln Assurance was yesterday fined pounds 70,000 because of failures connected to the pensions review, its second regulatory fine in just over a year. In April 1997 the company was fined pounds 20,000 over problems with its administration of PEPs.Reuse content