Jason Hollands, deputy managing director of Bestinvest, says his firm is extending a cautious welcom...
Jason Hollands, deputy managing director of Bestinvest, says his firm is extending a cautious welcome to Sandler's review although this comes with a pinch of caveat emptor.
"We have no argument at all with the overall objectives of the review, such as simplifying products, raising consumer awareness, improving adviser competency and removing tax distortions. As always though, the devil lies in the detail," he says.
One example of such "detail" lies in the proposals for solving the fees-vs-commission debate.
Hollands says that Sandler's approach is more pragmatic than the proposals put forward by the FSA in CP121, but that the idea of allowing commissions with the permission of the client "does not take into account the practical problems of collecting these sums."
Bestinvest would prefer nil initial commission, in favour of trail, but adds that this solution is less possible under Sandler's proposals, as it would have to charge clients directly, including VAT, which would actually make for a more expensive and difficult system.
Then there are questions over the practicalities of implementing the recommendations on with-profits products, which Hollands says will result in the disappearance of the smoothing effect that is the key selling point of such products in the first place.
This would happen because of the need to implement an MVA to stop policyholders cashing in when the redemption value of units goes above the value of underlying assets.
And on the issue of a new range of stakeholder products, Hollands says that there will still be a need for regulated advice, because consumers will still be in need of help in determining which asset allocation best suits their circumstances.
Finally, actually picking a time for the implementation of the recommendations is currently a mug's game, what with Pickering and the Revenue yet to release their views, and Bestinvest is now working to an April 2004 deadline, although "even that may be too demanding for some insurance companies".
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