Marlborough Stirling says it understands the mixed reaction by product providers to the Sandler review and in particular the proposed 1% stakeholder suite of products.
However, it claims that two of the challenges for the industry hold the key to making them work. If the industry can work towards making 'end-to-end electronic processing of transactions the norm in the industry' and 'tackling the problems of legacy systems', it says, then very much lower processing costs would result.
It adds that, whilst the detailed nature of such new regulations is yet to be known, it is clear that they will come to pass and ultimately they will benefit those providers that have a flexible approach to product design, multi-channel distribution capability and the lowest operating costs. Those that do not, risk losing market share and ultimately may not survive.
Marlborough Stirling says that rather than fighting the proposals head on companies should work to embrace them and assist the FSA to shape the future regulatory landscape. In terms of the cost of advice, Marlborough Stirling says that lessons could be learnt from the Irish approach to its equivalent of stakeholder pensions, the PRSA, where the cost of distribution has been separated into a premium charge capped at 5% with the annual charge capped at 1%.
In common with a number of leading organisations participating in the financial services market, Marlborough Stirling believes that the FSA should combine the output of all current regulatory reviews, such as CP 121, Sandler and Pickering, and draw up a single set of new regulations that will address the Government's objective of closing the savings gap, whilst enabling product providers and intermediaries to continue to run profitable businesses.
Chris Ryland, director and co-founder of Marlborough Stirling, says: “We believe that the appropriate adoption of new technology is going to be the key facilitator in enabling the industry to meet these challenges. It is not going to be easy and it will take considerable time to implement, thus the industry needs to start addressing the important issues now and must be prepared to invest for the future.”