For immediate release: Thursday 24th April 2003

IMA RESPONSE ON "STAKEHOLDER" SALES REGIME

The IMA has released its response to the Financial Services Authority Discussion Paper (DP19) on “Options for Regulating the Sale of Simplified Investment Products”.

The Discussion Paper examines the possible regulation of the sales regime for the proposed new “stakeholder” product range recommended by the recent Sandler report.  The Sandler report also recommended a 1% price cap on the new product range.

IMA’s response to the Discussion Paper indicates a preference for the so-called “Guided Self Help” model of simplified advice.  However, IMA does not believe that an adequate level of advice can be provided if the proposed 1% price control is implemented.

Richard Saunders, IMA Chief Executive, commented:

“If the Government is to be successful in attracting lower income earners to the new product range, it has to be able to attract product providers, and any sales process has to ensure that the consumer is recommended the course of action best placed to meet their needs.

IMA remains very sceptical that these complex issues can be adequately dealt with inside of the 1% price cap.  If we’re to avoid further trouble over mis-selling it is important that consumers get the best possible advice.

Investment in equity products will not be suitable for everyone; it’s important that any process the FSA comes up with takes into account people’s debt and protection situation, as well as the need for some “rainy day” reserves.”

ENDS

For further information, please contact:

Richard Saunders, Chief Executive, IMA, 020 7831 0898  

Colin Hawtin, Consultant, IMA, 020 7831 0898

Helen Stephenson, Communications Officer, IMA, 020 7831 0898

Notes to Editors:

1. The IMA is the trade body representing the UK asset management industry, representing some £2 trillion funds under management and over 99% of the UK investment funds industry (unit trusts and OEICs).

2. A copy of the full response is attached.

3. “Guided Self Help” is the concept of a layer of filter questions designed to determine whether or not a simplified product was suitable for an investor, but would also seek to determine whether the individual had other “non-simplified” product needs, such as debt management or income protection. 

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Tel: +44 (0) 20 7831 0898 Fax:+44 (0) 20 7831 9975 

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Investment Management Association is a company limited by guarantee registered in England and Wales Registered number 4343737.  Registered office as above.