FSA move on pensions advice levels the field

27 February 2007
The FSA's decision to retain the 'RU64' rule which determines the advice financial advisers can give on personal pensions has met with a mixed response from industry insiders.

The rule requires independent financial advisers to explain why the product they are recommending to customers is at least as suitable as a stakeholder pension.

The financial services watchdog was considering scrapping it after consultation but eventually decided that "future consumers of personal and stakeholder pension schemes will require the extra protection of the RU64 rule".

Consumer group Which? commended the decision to keep the rule as "important protection against inappropriate pension sales" which should give consumers "confidence they are being given the full picture about which pension product is right for them".

John Howard, chairman of the Financial Services Consumer Panel, also welcomed the move.

"Abandoning the requirement to point out the existence of stakeholder pensions could have led to mis-selling, especially in the run up to the introduction of the new National Pensions Savings Scheme," he warned.

But the Association of British Insurers' director general Stephen Haddrill protested that the rule was too prescriptive.

Financial advisers should be allowed to make a judgement on the advice they give, he claimed.

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