No surprises as to what constitutes the top financial services news today. The FT says that f...
No surprises as to what constitutes the top financial services news today.
The FT says that fund managers are furious with Sandler's comments about costs and performance in the industry.
One representative of Fidelity Investments, one of the world's biggest active fund managers, says: "This review is full of idealistic aspirations based on long-discredited prejudices about the investment industry."
Sandlers proposals would just force mediocre products on "supposedly unwitting consumers", he continues.
Other groups were not so negative, the FT says, but some, such as the Consumers Association, still warn that some of the proposals might leave the public with less protection when buying investments.
That consumer warning is taken up in The Times, which says the FSA's own Consumer Panel is warning that the proposals for a new type of simple savings products exempt from current sales rules would "sweep away rules that protect the consumer".
This, the panel says, could lead to another mis-selling scandal - an argument that will carry great weight within the FSA when it comes to implementing the reforms, as the Financial Services and Markets Act says the FSA must justify decisions to the panel.
"Even if a stock market-based product is made better and safer, it can still be wholly unsuitable for a particular individual, and we think it is wrong to encourage that person to buy it," The Times quotes panel chairman Colin Brown.
The Scotsman says that Sandler's report "lacks the nitty gritty" needed to make it a full success.
"The report, expected to bring about sweeping reform in the savings industry to fill a £27 billion pension savings gap, appears to be headed in the right direction. But it does not tell the financial services industry or consumers enough about what is expected of them," the paper writes.
The gist that only larger insurers will have the solvency required to take on the new high-street business of buying and selling simple products for everyone means it is not surprising that Aviva and Standard Life have welcomed the review, it adds.
It also quotes Gregor Stewart, head of Ernst & Young's Scottish insurance business, as saying the report delivered yesterday is probably going to end up being part of a longer-term plan to introduce compulsion along the Australian model, when it turns out that not even simpler products are leading to greater savings.
The Daily Telegraph quotes Iain Lumsden, chief executive of Standard Life as saying pension management costs could be cut dramatically, up to 25%, if the Sandler recommendations are pushed through.
That could mean administrative savings alone of £450 for a typical £100 per month pension over 20 years.
But, the paper quotes Prudential chief executive Mark Wood, Sandler still has not addressed a central concern of UK savers: "Locking money up in a pension fund, where you cannot touch it for decades and are then forced to spend three-quarters of it on an annuity, is the opposite of instant gratification."
"Left to their own devices, most people would rather spend more on holidays, cars and things that make them feel good immediately. That is why life assurance has to be sold, rather than rely on being bought."
In other general news today, most papers devote some space to president Bush's speech yesterday warning US companies not to cut accounting corners.
Under mounting pressure, Bush has ordered the formation of a special task force to look into corporate accounting, and has asked for sentences for corporate fraud to be beefed up, including prison sentences.
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