Selling stakeholder products through a basic advice process may increase the risk of future mis-selling because it will effectively reduce consumer protection, the Consumers' Association warned today.
It will also destroy consumer confidence in the long-term savings market, the Association said.
The FSA yesterday published a consultation paper, suggesting unqualified sales people should be able to advice on the government’s new range of simple savings plans, in the hopes it would increase long-term savings in the UK.
The CA criticised the proposal, deeming it both as "flawed" and "dangerous".
Mick McAteer, CA's principal policy adviser, said: "Proposals to reduce consumer protection will be a huge incentive for companies to mis-sell. The FSA seems to have chosen to address the long-term savings crisis with an approach that rewards an inefficient industry by stripping it of any responsibility for its actions.
"The Consumers' Association is particularly concerned by the implication that the stakeholder sales regime is merely a guinea pig for rolling out reduced consumer protection for the sale of other products in the future,” he adds.
The Financial Services Consumer Panel gave a lukewarm response to the proposal, saying that while it is a good start, "there is still some way to go".
Ann Foster, chairman of the Panel, said: "These new stakeholder products will be aimed at people who will be buying products for the first time - the very people who will need good consumer protection due to their inexperience in this field. In the light of the announcement on the price cap, these consumer protection measures will be even more important as the impact of charges will affect the suitability of the product."
She added: "It is in no one's interests for stakeholder products to become the next misselling scandal. Certain key consumer protection measures must remain in place."IFAonline
Pensions neglect to be criminal offence
All-day event on 24 April
Consequences could be more severe than in stress tests
AFH has six segregated mandate funds