67/02
9 July 2002
SANDLER REVIEW OF RETAIL SAVINGS INDUSTRY PUBLISHED
Ruth Kelly, Financial Secretary to the Treasury, today welcomed the publication of Ron Sandler's review of the market for medium and long-term retail investment commissioned by Chancellor Gordon Brown.
Ruth Kelly said:
?This report sets out a vision of a simpler, more transparent and more competitive medium and long-term savings industry which the Government endorses.
?Ron Sandler's recommendations have the potential to benefit consumers, the retail investment industry and improve the workings of the market. They will bring greater competition, greater efficiency and more productive investment. If we can produce simpler, safer products that consumers can understand and that are economic for providers to sell, we will be able to boost the level of saving.?
Work and Pensions Secretary Andrew Smith welcomed the support Mr Sandler's proposals give to the pensions agenda:
?Millions of people depend on the retail savings industry for their income in retirement. I welcome any proposals which can give them a better deal.?
Key recommendations of the Review include:
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a set of safer, good value, easy to understand 'stakeholder? investment products. These would be able to be sold through a lighter touch regime for sales and advice of investment products;
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Reforms to with-profits policies to make their structure and management simpler and more transparent;
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Tax measures aimed at simplifying the current regime for retail savings products.
Ruth Kelly added:
?A set of 'stakeholder products? would provide safer, good value products that ordinary people can understand. Greater focus on product design can clear the way for a streamlined sales process. This will make it profitable for providers and distributors to sell to a wider range of less well-off people. That will encourage people to save.
?Building on Ron's suggestions, we will be consulting consumers representatives, the industry and the FSA on these stakeholder products and their design. We will be working closely with the FSA who will separately want to consult on the regime for their sale.
?The proposals also represent a real opportunity for the industry and others to think radically about the provision of financial advice. They offer the potential to extend access to low cost, good quality, generic advice to the mass market.
?The Report tackles longstanding concerns about with profits policies. While at the same time recognising the value that many people give to being able to smooth out investment returns. And he has recognised that change in this market cannot come overnight. This balanced approach provides an opportunity to move to a new stable future for with profits.
?Ron's proposals on distribution, consumer education and investment will produce a more transparent, better-informed and hence more competitive market.
?We will consider the proposals on tax as part of the Budget process in the usual way.?
NOTES FOR EDITORS
1. The Sandler Review of Medium and Long-term Retail Investment set up by the Chancellor of the Exchequer in July 2001, in response to a recommendation of the Myners Review of Institutional Investment. (Treasury press releases 67/01 and 93/01).
2. Ron Sandler, 50, is chairman of Computacenter plc and Kyte Group. He was Chief Operating Officer of NatWest Group from October 1999 until March 2000, when he resigned following the take-over of NatWest by The Royal Bank of Scotland. Previously, he was Chief Executive of Lloyd's of London, where he played a pivotal role in the design and execution of Lloyd's Reconstruction and Renewal programme, which was successfully completed in 1996.
3. The review's terms of reference were;
?to identify the competitive forces and incentives that drive the industries concerned, in particular in relation to their approaches to investment, and, where necessary, to suggest policy responses to ensure that consumers are well served. It will look at the applicability of the principles of investment proposed by the Myners review of Institutional Investment.?
4. A copy of the Sandler Review report can be found on-line at www.hm-treasury.gov.uk
5. A Financial Services Authority press release on Mr Sandler's review is available at on the FSA website at www.fsa.gov.uk.
6. The Government intends to consult on the 'stakeholder products? suggested by Mr Sandler and the design features they might have. The Government will consider how best to manage the consultation process and announce how it will take this work forward at a seminar to be organised in September. The FSA will consult on the proposals within its remit.