The decision by the Financial Services Authority to keep the RU64 rule in place is "quite immaterial" for the majority of IFAs, says Aifa.
Announced yesterday, the decision means advisers will still have to explain to their customer, in writing, why the personal pension product they have recommended is at least as suitable as a stakeholder pension.
Yesterday the FSA stated it had decided to keep the rule in place as after careful consideration there was not a sufficient case to justify its removal, adding “our conclusion is future consumers of personal and stakeholder pension schemes will require the extra protection of the RU64 rule".
The Association of Independent Financial Advisers (Aifa) says it has been quite surprised by the announcement as like others in the industry the organisation thought the rule would be removed.
Fay Goddard, deputy director general at AIFA, says as the decision had already been stalled once before it seems the FSA has been pressurised into keeping the rule, with most pressure probably coming from consumer lobbyists, a suggestion supported by comments from Which? who argued the rule would guard against the mis-selling of pensions. .
However she adds: “Having read the paper, I think it’s a fair analysis of the situation, and in general it doesn’t make much difference to IFAs, as they still need to take stakeholder into account in the advice process.”
And although Goddard says on the whole the decision is “quite immaterial” as it will be “business as usual for most IFAs”, she stresses Aifa was supportive of the proposals to remove the rule as part of the FSA thrust towards more principles based regulation, pointing out the move “does really beg the question, why this rule is needed at all”.
Meanwhile the Association of British Insurers (ABI) says it regrets the FSA’s decision to retain the so-called RU64 rule which makes it difficult for financial advisers to advise on personal pensions.
Stephen Haddrill, director general of the ABI, says: “The FSA’s decision to keep RU64 is inconsistent with the drive towards a principles-based regulatory regime. The ABI will be scrutinising future FSA decisions to test whether they uphold the regulator’s commitment to better regulatory principles, or undermine them.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7034 2681 or email [email protected]IFAonline
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