To ask the Chancellor of the Exchequer what response his Department has made to the conclusion of the 2002 Sandler Review that the use of money from the inherited estate of with-profit funds to write new business distorts competition; and if he will make a statement. (190135)

The Financial Services Authority (FSA) is responsible for the regulation of life insurance and the inherited estate. The Financial Services and Markets Act 2000 requires the FSA to have regard to seven principles of good regulation including the desirability of facilitating competition between those it regulates and the need to minimise the adverse effects on competition that may arise from anything done in the discharge of its functions. The FSA made major changes to the way it regulates after its With Profits Review but, following consultation, it found that Sandler's specific recommendations in this area were not practical because of possible incompatibility with EU law and the potential impact on the mutuals sector.

The issue is covered in the FSA's Discussion paper on issues for with-profits business arising from the Sandier Review.¹

¹ Available at:

http://www.fsa.gov.uk/pubs/discussion/dp20.pdf

The Treasury responded to the recommendations of the Sandier review by launching the stakeholder suite, a range of simple, accessible and charge-capped savings products.