A set of stakeholder investment products should be created that could be sold without advice and wit...
A set of stakeholder investment products should be created that could be sold without advice and with no initial charges, according to Sandler.
The three products he envisions include a mutual fund or unit-linked life fund, a pension and a with-profits product, although he noted consideration should be given to a the inclusion of a protection product.
These products, as he called them, would be promoted as a specific and separate set of products with an overall brand identity, setting out stakeholder as the working title.
Regulation of these products should be tight with strict limits, to ensure simplicity.
The stakeholder with-profits product should feature an explicit smoothing account with smoothing designed to be neutral over the long run. It should have an explicit management charge to a separate management company and no shareholder participation in with-profits payouts. The underlying smoothed and unsmoothed asset value of the with-profits should be disclosed and standard rules established for the calculation of charges for the product to ensure consistency.
There should be no initial charge, and annual charges for stakeholder products should be regulated.
Given the existence of Cat Isas and the existing stakeholder pension, a 1% ceiling would be a suitable starting point but that this should be reviewed at regular intervals to ensure that it remains appropriate, Sandler reported.
Other details of the products are that there should be strictly regulated surrender charges - ideally none at all.
If consumers wished to exit the product, they should be able to do so with a limited and defined financial penalty from the provider.
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