Forum Brief: Sandler Review

The Sandler Review of the medium and long-term savings industry has criticised the complexity of many financial products.

Ron Sandler's report criticises a lack of transparency in the system - which he says results in an over-reliance on financial advisers.

Forum Response: Consumers Association

Sheila McKechnie, Director, Consumers' Association, told ePolitix.com: "This is a powerful report. It has correctly diagnosed the fundamental failings of the financial services industry. It shows that sole reliance on information and the market to deliver does not work. The products are too complex. It offers a way forward which focuses on the needs of consumers not industry.

"There are some fundamental challenges here for industry, FSA and the government. The litmus test will be whether the industry and the regulatory regime are fit to meet them and whether Sandler's sensible recommendations become a reality for all consumers.

"The review has tackled many of the problems facing consumers long-term.The government will now face a challenge to ensure that consumers in the short term who are imprisoned by bad products and who have been mis-sold are able to seek redress."

Forum Response: Barclays

A spokesman for Barclays told epolitix.com: "We welcome the Review. Barclays has already addressed many of the issues outlined in the Sandler Review to the extent we can within the current polarised market structure. Our strategic alliance with Legal and General already allows customers access to good value and simple pension and investment products.

"De-polarisation will allow even more competition and the provision of good quality products in the consumer's interest. We will look to enhance our current business model by providing a suite of products from a selection of good providers at very competitive prices. (For instance we already offer a stakeholder pension with no charges until 2003, unit trusts with annual fees well below 1 per cent (and no exit charges), and one of the lowest cost protection products on the market).

"We believe a proportionate and risk based regulatory regime should explicitly recognise where products are good value and transparent and do not carry significant potential for consumer detriment. Therefore we welcome the Review's recommendation that non- financial advisers can sell the products, and there would be no detailed requirement for 'suitable advice' and Know Your Customer.

"We believe there is still a lot of work to be done on the definition of independent advice and the usage of the term adviser."

Forum Response: Prudential

A spokesman told epolitix.com: "Prudential welcomes and is fully supportive of the aims of the Sandler Review and recognises the need for further simplification of financial services as being a key ingredient in closing the UK savings gap.

"In particular, we welcome the fact that the report aims to encourage more people to save by making it easier to do so and proposes a new simplified sales process. We also welcome the Report's recognition of the value of with-profits products and the acknowledgment of the role that Independent Financial Advisers play in the advice and sales process.

"The primary motivator behind the Review is the need to encourage more people to save more for their future. We therefore urge the government to align all of the reviews currently being undertaken and to work closely with the regulators and the industry to create a single package of measures to reduce the UK savings gap. We look forward to playing a full part in this process.

"The Report itself contains much detail and it will take some time to work through each of the individual recommendations and consider how they might be implemented. We expect to play an active part in the further consultations."

Forum Response: Association of British Insurers

Mary Francis, director general of the ABI, told ePolitix.com: "The Sandler report can help deliver confidence for consumers and stability for the industry.

"Many of Ron Sandler's ideas reflect best practice and new thinking in the savings industry. We particularly welcome his support for simpler products and less red tape.

"The Sandler review confirms that the industry has made real progress in recent years, for instance through the Raising Standards quality mark scheme. The proposals for greater clarity about the way with-profits products work include many of the ABI's own ideas. More needs to be done, of course, and Ron Sandler's recommendations provide a good basis for further improvements.

"We will be working closely with the government and the FSA to see these changes through. Our customers deserve the best possible service from an efficient and well-run industry.

"The significance of today is that we should be able to move forward with confidence. With Alan Pickering due also to report on Thursday, we are coming to the end of the period of reviews. Now we need real action to help close the UK's £27bn savings gap."

Forum Response: Help the Aged

Mervyn Kohler, head of public affairs at Help the Aged, told epolitix.com: "Help the Aged welcomes the Sandler report and its positive recommendations to simplify the currently complex savings industry. It is interesting to compare this drive for simplicity with the increasing complexity of the state benefits regime.

"The government would do well to heed the recommendations of the Sandler and forthcoming Pickering report. Help the Aged believes that this evidence, along side the collapsing confidence in pensions, means the Government must produce a new Green Paper to show how tomorrow's older people can save towards a worthwhile pension.

"Help the Aged maintains there are three principles needed to uphold a solid savings policy. Products must be worth investing in, simple to understand and affordable to the individual, whatever their income.

"This report certainly makes welcome headway in recommending simpler and more affordable savings products, so that individuals can more easily meet their own obligations.

"However, the long term crisis in pensions will only be addressed if employers and the government meet their respective obligations to support the efforts of the individual.

"Help the Aged wants to see employers making a larger contribution to support pension schemes, and for the government to simplify the pensions and benefits system.

"Pensions and savings must be an equally shared responsibility between the individual, the employer and the State to ensure that future generations can plan for an old age free from financial worry."

Forum Response: Age Concern

Gordon Lishman, director general of Age Concern England, told ePolitix.com: "Many younger people risk being short-changed in later life because they don't understand how much they need to put aside. These reports shed some light on the fundamental problems with the industry which leave people confused and gambling on their future.

"Increased compulsory contributions to occupational pension schemes would do nothing to help those who don't have access to a scheme, or the third of people between the ages of 50 and 65 who are forced to retire early because of age discrimination. These people have no hope of making decent provision for later life.

"The government should have a joined up pensions policy which ensures that people who try to save for their retirement are guaranteed to be better off for doing so."

Forum Response: National Association of Pension Funds

Christine Farnish, chief executive of the NAPF, told ePolitix.com: "This is an important first step towards much-needed reform of the pensions landscape, and so creating a climate in which pension provision through the workplace can flourish.

"Ron Sandler has identified practical ways of ensuring more people have access to a range of simple, "non-toxic" savings products, to top up what millions already build up through the workplace.

"We share Ron Sandler's clear distaste for excessive red tape, and welcome the fact that his Review shows signs of close collaboration with the simplification reviews currently being prepared by Alan Pickering and the Inland Revenue.

"It is now important that these other two reviews complete the picture, and that the government takes action to simplify the pensions regime."