FSA Annual Report 2006/07 - Better Regulation Ltd
FSA Annual Report 2006/07 - Better Regulation Ltd
FSA Annual Report 2006/07 - Better Regulation Ltd
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Section six – Appendices<br />
Appendix 2<br />
117<br />
Our research into the availability of ongoing advice showed that there is<br />
some reluctance on the part of advisers to engage with with-profits<br />
policyholders. The research highlighted several observations on the role of<br />
the <strong>FSA</strong> – 61% thought <strong>FSA</strong> should be the body primarily responsible for<br />
giving advisers guidance on how to advise clients about their with-profits<br />
product, but 63% said there was nothing else we should do beyond what we<br />
already do. Only 6% thought the guidelines were unclear and only 9%<br />
thought clearer/better guidance from <strong>FSA</strong> would help matters.<br />
There are a number of statutory safeguards for policyholders at the time of<br />
mergers, sales and consolidations surrounding changes in control and Part<br />
VII transfers. In the case of the latter, these safeguards include the<br />
appointment of an independent expert, the right of policyholders to be heard<br />
in Court, and the <strong>FSA</strong>’s opportunity to comment on all policyholder<br />
communications before they are issued. We are pleased that the Panel<br />
considers our approach to be logical. We give careful consideration to the<br />
likely effects on policyholder interests and do object to proposals which<br />
appear to be detrimental to their interests or to have a material adverse effect<br />
on a particular group of policyholders.<br />
State second pension<br />
In May 20<strong>07</strong> we concluded our thematic work reviewing past selling<br />
standards in relation to Appropriate Personal Pensions (APP) sold since<br />
1988. We concluded that there is no evidence of widespread mis-selling based<br />
on the regulatory standards that existed at the time.<br />
However, a small proportion of sales made (1.5% of policies) involved<br />
consumers who were above the age standards set by individual firms at the<br />
time and these consumers may be at particular risk of having been given<br />
inappropriate advice. We carefully considered what form of regulatory<br />
intervention would be the most effective and proportionate, particularly as<br />
there are reasons why consumers may still have bought an APP<br />
notwithstanding their age at the time. In reaching this decision, we took<br />
account of a number of factors which we have previously published,<br />
including the scale of the problem, the average loss per consumer and the<br />
administrative costs involved in getting any due redress to consumers. We<br />
decided that the most proportionate response was to:<br />
• publish a step-by-step guide for consumers explaining the issue, how to<br />
find out whether they are affected and, if so, how to complain:<br />
http://www.moneymadeclear.fsa.gov.uk/pdfs/s2p_wrongly_advised.pdf ;<br />
and<br />
• continue to monitor the number of complaints received by the FOS in<br />
this area in case these indicate issues with the past sales of particular<br />
firms or the way in which firms are handling complaints. Where issues<br />
are identified firms will be responsible for dealing with those issues as<br />
part of their ongoing obligations to treat their customers fairly.<br />
In May 20<strong>07</strong> we also updated our factsheet which helps consumers with<br />
their annual decision about whether to contract out of the additional state<br />
pension. It is available at:<br />
http://www.moneymadeclear.fsa.gov.uk/pdfs/contracting_out.pdf