Key City panel joins the attack on Sandler's 'simple' savings products
Low-cost savings and investment products suggested last year in a Treasury report may flop because it might not be possible to market them without incurring risks of mis-selling, according to a panel of experts that advises the City's regulatory authorities.
The Financial Services Practitioner Panel (FSPP), an independent body that monitors the Financial Services Authority, warned that companies are concerned that selling the "ultra-simple" products, which are backed by the Government, without offering any advice might open them up to hefty compensation claims in the coming years.
The warning, issued by Donald Brydon, chairman of the FSPP, came after Sir Howard Davies, chairman of the Financial Services Authority, struck a similar note of caution at the regulator's annual meeting on Thursday. "I am not opposed in principle to ways of simplifying the regulatory environment. But is it possible to devise a pension or with-profit product that is unmis-sellable? I don't know the answer," he said.
Mr Brydon, who is also chairman of Axa Investment Managers, said the possibility of being liable for potential mis-selling claims even - if companies comply fully with regulations on the new products - would mean that they would continue to carry out extensive "fact finds" about customers.
This would bump up the cost of selling and make the industry unwilling to agree to the 1 per cent price cap advocated by the Government. The sentiment is at odds with the Treasury, which commissioned Ron Sandler, former chief executive of Lloyd's of London, to examine the savings industry.
The Treasury wants to introduce a new set of lighter regulations by 2005 that would apply to a range of basic products aimed at those on low and middle incomes as a way of boosting their savings into pensions and other investments.
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