Several bodies, including the FSA, AITC, ABI and CA have welcomed the proposals in the Sandler Revie...
Several bodies, including the FSA, AITC, ABI and CA have welcomed the proposals in the Sandler Review, but initial reactions from Scottish Life are that it is slightly dissappointing in terms of the issues such as simplification that SL feels have fallen wide of the mark.
Sandler makes the point that products need to be simplified as part of the process of encouraging savings.
SL's head of information Alasdair Buchanan says, however, that calling for simpler products without looking at the context in which those products are being sold leaves a void.
"He almost totally ignored the neccessity to simplify the environment before you do that."
For example, the review distorts reality by not fully accounting for the effects on savings of the 50% or so of UK pensioners who qualify for means tested benefits, which in turn reduces the value of savings.
"We welcome simple products, but we must have a different environment."
On the defined payments system issue, Buchanan says it was a case of "one cheer rather than three cheers" because while Sandler rejected the FSA's proposals as flawed he still agrees with the broader outline of the DPS proposals in CP121.
Sandler's proposals also do not go into the greater or lesser tax efficiencies that may be possible through commissions as they currently stand, which means the up-front payments favoured in the review may make it more expensive to buy pensions products.
Scottish Life's initial reactions also include reference to Sandler's attack on active fund managers.
However, pushing active fund managers out of the picture totally would be "a nonsense" Buchanan says, because they are needed to create a market - if every fund is a tracker then there is no market.
Overall, SL believes that there have been no surprises in the review given the leaks to various media over the past weekend.
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