Liddell details pensions mis-selling sanctions
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Your support makes all the difference.Helen Liddell, Economic Secretary to the Treasury, said yesterday that failure by pension providers to clear up the mis-selling scandal would affect their ability to sell in two potentially vast new markets - stakeholder pensions and individual savings accounts. Andrew Verity reports.
In a statement to the House of Commons, Mrs Liddell said the records of investment firms in compensating investors for mis-selling will be taken into account when they apply to sell the new financial products to be launched by the Government.
She said: "We anticipate that future decisions on the regulatory approval of stakeholder pensions would take into account the conduct and corporate governance of those involved. This would include, of course, their record in settling cases of mis-sold pensions.
"The Government believes that the time has come for a whole range of sanctions to come into play. The only way for a firm or an individual to avoid disciplinary action is to avoid the conduct which warrants it."
The Government also confirmed yesterday that directors could be removed from boardroom posts for failure to meet deadlines for clearing up the mis-selling scandal. More than 90 per cent of the top priority cases must be completed by the end of December.
Errant directors could also be barred from working within the financial services industry. The same will apply to the managers and sales staff of life insurers and independent financial advisers.
"Far too many firms - from big insurance companies to small independent financial advisers - have been slow to act. Some firms have hardly started. They have not yet grasped the severity of the situation," Mrs Liddell said.
While the Government has hinted in the past that poor conduct of the review of mis-sold pensions would affect the ability to sell the new products, Mrs Liddell's statement is the first explicit warning.
Stakeholder pensions are at the heart of the Government's much-touted pension reforms, aimed at giving people on lower incomes better access to pension provision. They will be designed as collective investments and marketed through trade unions, professional bodies and other affinity groups.
Given that 8 million people have no retirement provision except state pensions, the market is potentially huge.
In order to compete with other pension products, the new pensions would have to enjoy tax breaks.
Mrs Liddell has also given her first formal warning that mistakes in the mis-selling review will affect decisions on which companies will sell individual savings accounts, the new tax-privileged vehicle set for launch in April 1999.
The Personal Investment Authority, the regulator which monitors the review of pension mis-selling, yesterday said Barclays Life and United Assurance had completed the first tranche of urgent cases on time.
The firms were required to complete reviews of 90 per cent of top priority cases by 31 October, an earlier deadline than many other firms.
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