Intermediaries will not have to provide a 'reasons why not' letter in recommending an alternative pe...
Intermediaries will not have to provide a 'reasons why not' letter in recommending an alternative pension scheme to a stakeholder product. However, they will have to state why a non-stakeholder product is equally as appropriate.
In releasing the final regulations concerning decision trees, the FSA has made some amendments to the way in which IFAs use the trees.
Steven Cameron, pensions development manager at Scottish Equitable, said IFAs will no longer have to show clients the decision trees if they are giving full advice on a pension product. Earlier requirements to include the trees, even if advice is being given, could have resulted in bad faith if the tree, which is designed only to be generic, ended in a different answer than the solution an IFA suggests following a factfind, Cameron said.
The regulators have also decided the decision trees will not have to be included in key features documents but will be made available at libraries and Citizen Advice Bureaus.
Nigel Stammers, pension strategy manager for Clerical Medical, said: "Key features are issued by providers following a product recommendation. The previous regulations were putting the cart before the horse because consumers had to enquire about the product before seeing a decision tree."
Stammers also noted the FSA has included a caveat that it would accept no responsibility for the outcome of conclusions arrived at by using decision trees.
He said: "The FSA is explicit that it is not to blame but it does not make it clear who will be held to blame in the event of a mis-buying claim."
Cameron said he was particularly concerned by the FSA's statement which claims the younger and higher earning individuals stood to gain more by contracting out of Serps. The statement is followed by advice to seek assistance from a financial adviser if the individual is having trouble in making the decision.
He said: "I would ask the FSA how they justify that sentence when you now have age-related rebates that mean the attraction of opting out would be the same for someone aged 30 or even 35 as it is for a 20-year-old."
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