For immediate release: Wednesday 7 May 2003

IMA RESPONSE ON DESIGN OF "STAKEHOLDER" PRODUCTS:

PRICING SHOULD BE LEFT TO THE MARKET

The IMA today released its response to the joint Treasury and Department for Work and Pensions consultation paper on the proposed specifications for Sandler “Stakeholder” products. 

On the key issue of the Government’s proposed price cap, the IMA has reiterated its opposition to Government price controls.

Richard Saunders, IMA Chief Executive, commented:

“The IMA remains firmly opposed to the imposition of a price cap on these products.  The growth of ‘one per cent’ fund products over the last ten years was the result of market forces and competition, and not the introduction of CAT standards.  Pricing should be left to the market – competition has led to the existence of cheap mutual fund products since the 1980s.”

The IMA also released analysis demonstrating that the introduction in 1999 of Government “CAT standard” ISAs, which are subject to a one per cent a year price cap, failed in their objective of encouraging such products.  9 out of the top 10 CAT standard funds were already established, with their existing price structures, well before the introduction of CAT standards, and simply adopted the “CAT” mark in 1999.  The main growth in market share occurred before the introduction of CAT standards and was largely the result of increased market share secured by existing funds, notably index trackers, not the result of new CAT-standard fund launches. 

ENDS

For further information, please contact:

Richard Saunders, Chief Executive, IMA, 020 7831 0898

Clare Arber, Head of Communications, 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).

65 Kingsway London WC2B 6TD 

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

www.investmentuk.org 

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