The Financial Services Authority (FSA) has today announced proposed changes to the liberalisation of ...
From 29 March, anyone advising a client on stakeholder pensions products must make it clear in all written literature whether they are tied agents, representatives of a single company or can call themselves an independent financial adviser.
A provider firm, whether or not it has its own stakeholder pension, is now allowed to sell the stakeholder pensions of as many other firms as it wishes, providing they are labelled as "adopted packaged products" under the new polarisation rules.
Advisers or IFAs selling "adopted-packaged products" or tied-agent products will then be held responsible for the advice given on all the sales, irrespective of which firm's product it sells. Providers who eventually sell the product will likewise be responsible for the product terms and the administration connected with servicing the policyholder.
Appointed representatives - or direct sales force as they are otherwise known - will only be allowed to sell the products of the provider they are contracted to and the adopted packaged products if such provider agreements exist.
However, the new polarisation rules now allow all authorised companies to conduct direct mail campaigns to distribute the packaged products of one or more companies, providing it is made clear that no advice is being given and should consumer be unsure about the suitability of products that they seek advice.
Such rules were laid out in Consultation paper 80 (CP80), unveiled by the FSA in January 2001. At that time, it was suggested that advisers on life assurance, personal pensions and unit trusts be obliged either to be independent or to advise on the products of only one company (tied advice).
Within CP80, the FSA recommended that stakeholder pensions be created by providers and sold through another firm and its representatives, and that direct offer financial promotions should be removed from the polarisation regime.
It was also suggested within CP80 that firms be permitted to adopt and sell CAT standard Isas from other providers, however, the FSA has decided not to include Isas at this stage following advice from the FSA's Consumer Panel.
The aim of confirming rules of stakeholder pension polarisation, says David Severn, head of investment business policy at the FSA, is to increase access and choice for those consumers using tied advisers.
"We received mixed views on our proposals, ranging from those who don't think we are going far enough to those who are opposed to what we are suggesting," says Severn.
"We've listened carefully to everyone's views and the FSA board has decided to maintain its cautious approach in this first stage of changes to the polarisation regime. The changes we have announced are not intended to pre-judge the wider review of polarisation on which the FSA will be seeking views later this year."
Comments from industry representatives to follow....
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