Jane Samsworth, the SPC President, said :-

"Any legislation intended to flow from the Myners Review should be subject to scrutiny in the light of the outcome of the Pickering Review, with a view to deciding (a) whether to proceed with the legislation at all and, if it is decided to proceed, (b) the terms of the legislation. If the Pickering Review leads to the removal of accumulated layers of over regulation, the Myners Review must not impose different, but equally stifling, layers".

In response to DWP, SPC also indicated that :-

• It is already common practice that custodians are independent of the sponsoring employer. SPC therefore sees no need to legislate on this. Legislation would give scheme members a sense of additional security which would not be matched in practice.

• Any new duty of care on trustees should apply collectively to the trustee body.

• It would not advocate extending the new duty of care to fiduciaries other than pension scheme trustees. The practical outcome of doing so would be to create conflicts of interest, because fund managers would have to assess whether instructions from their direct client (i.e. the trustees) were compatible with the best interests of the beneficiaries. Sharing the responsibility with others reduces clarity. Leaving it with trustees alone leaves no doubt as to where the responsibility lies.

• It is unconvinced that the creation of a new statutory shareholder activism duty, to overlay duties which probably already exist, will bring any extra security or extra benefits for the ultimate beneficiaries of pension schemes.

SPC has submitted comments on the FSA consultation paper containing proposals to end the current polarisation requirements which apply to financial advice

Our interest is in preserving the integrity of independent advice and confidence in it. This requires confidence in the market for advice across the board, whether independent or not. A problem in one of part of the market will be likely to have a negative impact on the market as a whole.

We have not found convincing, at any stage in the current round of discussions, the case for changing the current polarisation requirements. It is true that, like any part of the Financial Services regulation system, polarisation could work better than it does, and our view is that change should be aimed at improving the current structure, rather than replacing it. Despite the considerable analysis of the advantages of the possible new requirements, in comparison with the existing ones, our impression is that their attractiveness mainly derives from the fact that they have not yet been exposed to the stresses and strains of being operated, whereas the shortcomings of the current system have had time to emerge.

We are concerned that the two main aims set out in the consultation paper - liberalising the market for advice and maintaining adequate consumer protection will not in practice be compatible, leading to disappointed consumer expectations and damaged confidence.

We note that the consultation paper refers to research having established that consumers understand the concept of independence, and that other types of adviser should be explicable to them. The danger we see is that the distinction between being independent and not being independent is relatively straightforward. We believe that the more complicated the regime which replaces the current one, the less likely it is that consumers will readily understand it and the more likely it is that disappointed expectations will be the result.

We do not agree that, in order to distinguish an independent firm from a tied agent, it is essential that payment for advice must be made by a defined payment and not by commission. The consultation paper itself refers to the evidence generally indicating that commission bias does not influence the construction of IFA product panels. The inclusion of a requirement for remuneration by defined payments in the definition of independent means that, if an IFA wishes to continue to offer clients a choice between payment through fees or commission and to continue to refer to itself as independent, it will need to incur the cost of restructuring its business, simply on account of the regulatory distinction drawn between commission and fees.

That absence of commission is not essential to the definition of independence can be illustrated by the fact that a firm which was 100% owned by a product provider, and sold only that provider's products, but operated on the basis of defined payment, could not credibly be viewed as independent.

If independent status is conditional upon defined payment arrangements, the definition of a defined payment will need to be clear from the outset.

The consultation paper remarks that a condition for retaining commission would be that the firm could not call itself "independent". It then states that this would have the incidental effect of those wishing to remain independent being no longer able to issue direct offer financial promotions. In the group personal/stakeholder pensions market, the effect would be far from incidental. Here it is common (because it is cost-effective in an area of the market where pressure to limit costs is considerable) for arrangements to be promoted through direct offers, with any commission rebated into the arrangement and the cost of advice being met by the employer associated with the arrangement. This has no bearing on the independence of the adviser and is a practice which should be consistent with the adviser referring to itself as independent.

The position of introducers would become problematical in a market where polarisation did not exist. The risk would increase that some form of quasi-independent status could mistakenly attach to them. We therefore propose that in a depolarised market, introductions should only be permitted to advisers with independent status.

The consultation paper raises the possibility of intermediate options, short of full abolition of polarisation. We agree that clarity about a firm's status is extremely important. If the existing clarity is to be ended, the least undesirable alternative is outright abolition, because an intermediate position would leave scope for confusion about status.

We are concerned to note that FSA does not rule out further consideration of multi ties (distributor status) as an option for the future. Paragraph 4.71 illustrates the key risk in doing so - "Moving to distributor status would mean that a firm would still be able to operate as an entity independent of any particular provider, but would release itself of the obligations that go with being an IFA". It is difficult to envisage a more confusing, and potentially misleading, concept for consumers.

The SPC Dinner will be on November 7 at the Savoy. The principal guest is Ron Sandler, who is leading the Treasury's review of medium and long term retail savings.

The SPC Council for 2002-2003 was announced at the SPC AGM on May 22. The membership is as follows :-

The next meeting of the SPC Health and Risk Benefit Forum takes place on July 5. The guest for informal discussion will be Dorothy Henderson (Employment Law Partner, Travers Smith Braithwaite).