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Déjà vu as FSA holds up mirror to providers

by Daniel Grote on Feb 05, 2013 at 10:12

Déjà vu as FSA holds up mirror to providers

It was difficult to shake off a sense of déjà vu when the Financial Services Authority (FSA) announced last week that it was to scrutinise the unit-linked fund sector.

The first edition of New Model Adviser® (February 2005) led on a story of the regulator’s concerns in this area. Eight years later, it has launched a thematic review.

News of the review prompted some bemused reactions from readers on our website: ‘A pity they didn’t do this in 2007!’ remarked one.

Quips aside, there is some logic for the FSA to be focusing on mirror funds now. It is a huge area, accounting for £800 billion of assets, and will burgeon as auto-enrolment unfolds. If there was a time to address concerns about life company governance of the funds, now would be it. Concerns over ‘inadequate disclosure’ may be nothing new, but it’s better the sector is scrutinised now than never.

It’s another headline review to be led by Nick Poyntz-Wright, head of the regulator’s life insurance department, and former Skandia UK chief executive.

I do wonder how much Poyntz-Wright’s agenda since arriving at Canary Wharf has been driven by his past life. His first notable act was to write to providers and networks warning about distribution deals, and he is also leading the FSA’s unit-linked fund probe.

The fact he used to work at one of the UK’s largest mirror fund providers is surely more than just a coincidence.

4 comments so far. Why not have your say?

Julian Stevens

Feb 05, 2013 at 11:44

I tend to refer to them as shadow funds (not least because they don't exactly mirror the real versions) and now that the genuine articles are available via various Unit Trust platforms (such as Skandia's Collective Retirement Account), wherever it's financially viable, I'm advising clients to transfer their pension fund assets accordingly.

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Duncan Carter 2

Feb 05, 2013 at 13:07

How about a review of With Profits funds, they are still one of the murkiest and opaque structures kicking about?

Trying to identify what they are up to and what they charge is the devil's own work especially on older funds and where takeovers have occurred.

My suspicion is that there would be great resistance on the part of providers and there might be too much politics involved elesewhere.

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salam ansari

Feb 10, 2013 at 13:30

These are some of the areas FSA should have investigated years ago!!! rather than get after the advisers, as they are the weakest link, under the influence of insurance companies, networks,etc. They made life difficult for the distribution sector and have decimated adviser numbers! They do need to have a look at banks and insurance companies and their functioning. This needs to be done with industry professionals and a practical outcome needs result! Too late for the advice sector as that is unworkable and in chaos! Business will remain stagnant, the economy is suffering!

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Feb 14, 2013 at 09:07

If the mystery of these funds are to be truly "outed" then the huge experience and intellectual capital Nick Poyntz-Wright has from his Skandia days makes him the perfect person to investigate.

Life offices be very afraid!!

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