Dance of the veils on fees

PICTURE the scene. You are one of the 7.5 million holders of a personal pension, or are among the millions who have taken out an endowment policy to help pay off a mortgage.

That nice, friendly insurance salesman comes round to your house. He tells you that you should increase payments into your policy.

That's fine, you say: "In that case I would like to know how much this will cost me in commissions and charges on the policy you want me to upgrade."

"Sorry," he tells you. "Under the new disclosure regime for the financial services industry, I don't have to supply you with that information."

Your brow creases: "But I thought that the new regime lays down that from January 1995 you and your company have to do just that."

He replies: "The rules lay down that I only have to give you these details on any policy I recommended after January. If you increase contributions on `old' policies taken out before that date, the rules say I don't have to tell you exactly what it will cost."

This conversation is likely to be repeated in hundreds of thousands of homes throughout Britain in years to come.

In the process, it makes a mockery of the disclosure regime set up by the Securities & Investments Board, the City's top financial regulator.

Disclosure was to usher in a new era; one in which we the consumers would receive information to help us decide whether to buy a product.

This is not an academic issue. Figures show that up to 30 per cent or more of premiums paid go on company charges, thereby dramatically cutting investors' returns.

The SIB and the Personal Investment Authority, the financial services industry's regulator, have swallowed the arguments of insurance companies, banks and building societies. They said their computer systems were not up to delivering this information.

Rubbish. The truth is that they could, but don't want to.

There is only one word to describe regulators who allow insurers to drive a coach and horses through rules designed to protect us. Barmy.

THEIR Lordships have been pretty busy recently. Each time the Government comes before the House of Lords with bits of its Pensions Bill, a peer is guaranteed to stand up to amend it.

Several amendments have related to the position of divorced women who, it is argued, should be entitled to a slice of their ex-husbands' pensions in cases where they stayed at home and were not contributing to their own schemes.

The Government has listened in part. It wants to give courts the power to tell pension schemes to pay divorcees part of a pension when their former husbands have retired.

There are two problems with this. First, it ties a woman to her ex for life. Second, it raises the possibility she won't get anything if he dies before retiring.

As we write on page 10, there is a better suggestion. This involves giving the woman what she is entitled to right away. The Government should act.

JOY it is to be alive in Reading today. A market town once known for its bulbs, beer, biscuits and Oscar Wilde's Ballad of Reading Gaol, it is now described by guide books as having "little to delay the tourist".

Yet its residents are being given the ultimate accolade by Prudential. The mighty Pru has slashed the cost of its buildings insurance cover in Reading by 29 per cent, down from £180 to £143 for a three-bedroom semi.

Only one question remains: why is it that Reading's premiums were so high in the first place? And why, even now, are they higher than in other, more blighted, urban areas such as Liverpool, Birmingham and Manchester? I only ask.