FSA Annual Report 2006/07 - Better Regulation Ltd

Section six – Appendices
Appendix 2
117
Our research into the availability of ongoing advice showed that there is
some reluctance on the part of advisers to engage with with-profits
policyholders. The research highlighted several observations on the role of
the FSA – 61% thought FSA should be the body primarily responsible for
giving advisers guidance on how to advise clients about their with-profits
product, but 63% said there was nothing else we should do beyond what we
already do. Only 6% thought the guidelines were unclear and only 9%
thought clearer/better guidance from FSA would help matters.
There are a number of statutory safeguards for policyholders at the time of
mergers, sales and consolidations surrounding changes in control and Part
VII transfers. In the case of the latter, these safeguards include the
appointment of an independent expert, the right of policyholders to be heard
in Court, and the FSA’s opportunity to comment on all policyholder
communications before they are issued. We are pleased that the Panel
considers our approach to be logical. We give careful consideration to the
likely effects on policyholder interests and do object to proposals which
appear to be detrimental to their interests or to have a material adverse effect
on a particular group of policyholders.
State second pension
In May 2007 we concluded our thematic work reviewing past selling
standards in relation to Appropriate Personal Pensions (APP) sold since
1988. We concluded that there is no evidence of widespread mis-selling based
on the regulatory standards that existed at the time.
However, a small proportion of sales made (1.5% of policies) involved
consumers who were above the age standards set by individual firms at the
time and these consumers may be at particular risk of having been given
inappropriate advice. We carefully considered what form of regulatory
intervention would be the most effective and proportionate, particularly as
there are reasons why consumers may still have bought an APP
notwithstanding their age at the time. In reaching this decision, we took
account of a number of factors which we have previously published,
including the scale of the problem, the average loss per consumer and the
administrative costs involved in getting any due redress to consumers. We
decided that the most proportionate response was to:
• publish a step-by-step guide for consumers explaining the issue, how to
find out whether they are affected and, if so, how to complain:
http://www.moneymadeclear.fsa.gov.uk/pdfs/s2p_wrongly_advised.pdf ;
and
• continue to monitor the number of complaints received by the FOS in
this area in case these indicate issues with the past sales of particular
firms or the way in which firms are handling complaints. Where issues
are identified firms will be responsible for dealing with those issues as
part of their ongoing obligations to treat their customers fairly.
In May 2007 we also updated our factsheet which helps consumers with
their annual decision about whether to contract out of the additional state
pension. It is available at:
http://www.moneymadeclear.fsa.gov.uk/pdfs/contracting_out.pdf