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In 2001 the Government of the United Kingdom asked the British businessman Ron Sandler to:
- Identify the competitive forces driving the retail financial services industry; and
- Suggest policy responses to ensure that customers are well served.
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In 2001 the Government of the United Kingdom asked the British businessman Ron Sandler to:
The Sandler report suggested that there are three main reasons why the industry seemed to be failing to serve large portions of the population. The government is particularly worried about so called savings gap, i.e. the failure to provide adequate funds for their retirement. The report cited:
Ron Sandler suggested the development of a suite of simple, low-cost, risk-controlled products. The name “Stakeholder” was given to those products, although they are still referred to as Sandler products. The maximum level of charge permitted per annum for the investment products was set at 1.5% for the first 10 years of the life of the product and 1% thereafter. For stakeholder pensions arranged prior to 6 April 2005, charges are capped at 1% throughout.
The suite of stakeholder products includes five types of products:
Controlling the risk is also important. This is achieved by limiting the proportion of shares in the stakeholder unit-linked and with-profit products to 60% of the funds. The remainder must be invested in fixed-interest securities and cash. A simplified selling model applies to these products, with the exception of the smoothed investment. The rules are included in the Conduct of Business sourcebook, and can be summarised as follows:
The process must be terminated at any stage if:
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