FSA clears the way for Government's stakeholder products
The regulatory measures, finalised in today's policy statement, follow consultation with consumer bodies, industry and trade associations, on the detailed rules governing the sales process, including the structure of advice interviews. During the consultation launched in July this year, the FSA conducted further consumer testing to check that the process was effective and protected consumers properly. The results of that research are also published today.
As announced last week, the stakeholder smoothed product is the only product in the Government's suite that will not be sold through the new process. The FSA intends to undertake further research on this product to test whether it can be included.
Dan Waters, director of retail policy at the FSA, said: “We fully support the aim of making it easier for all consumers to have access to the stakeholder products. After considerable research we have developed a lower-cost form of advice that will enable authorised firms to sell the Government's stakeholder products simply and quickly to consumers, while at the same time making sure they are properly protected.”
The 'basic advice' sales process will be centred around a series of pre-scripted questions to check whether a stakeholder product would be suitable for the customer. A recommendation will then be made based on the consumer's attitude to savings and risk and current financial position. This simpler sales process can be much easier and faster than the current 'full' advice regime which advisers must use when giving recommendations to consumers on other investment products. If problems do arise, consumers will be able to have their complaints addressed, as is the case under the current regime.
Dan Waters said: “We have taken a conservative and evidence-based approach but one that always puts the consumer first. Not every consumer wants, or can afford, fully-tailored advice on their savings and investment needs. We have created a more 'off-the-peg' style of selling that should suit the needs of consumers who are looking for an alternative to full advice.”
Firms will be able to sell stakeholder products under the new regime from April 2005.