Law Society notices

Statement from the Law Society Council on the review of free-standing additional voluntary contributions

In May 2000 the Financial Services Authority (FSA) issued model guidance on the review of free-standing additional voluntary contributions (FSAVC).

The model guidance sets out the procedures and standards to be used for the FSAVC review.

The review covers certain categories of FSAVC policies that were advised on or arranged on an execution-only basis between 29 April 1988 and 15 August 1999.

These categories are:l Matched AVC schemesFSAVC sales to investors whose employer's contributions to their occupational pension scheme would have been greater if the employee had contributed more to the in-house additional voluntary contributions arrangement or to the occupational pension scheme rather than to the FSAVC.l Other subsidised AVC schemesFSAVC sales to investors who would have received an enhancement in benefits, the costs of part of which would be met by the employer, had the investor's contribution been directed to the in-house additional voluntary contributions arrangement or to the occupational pension scheme.l FSAVCs converted from personal pensionsCertain sales of FSAVCs which converted from personal pension policies where the personal pensions were sold to investors during an occupational pension scheme waiting period and at the date of conversion the investors were eligible to join a matched or other subsidised additional voluntary contributions scheme as detailed above.l Requests for reviewWhere a request for a review of an FSAVC is received.The review process, after the identification of relevant cases, broadly follows the same principles as the pensions review.

These are compliance assessment, loss assessment, causation assessment and, where appropriate, redress and settlement.The FSA is proposing to collect data from product providers to establish a database of all FSAVC sales within the relevant categories.

Access to this database would speed up and simplify the process of identifying relevant cases.

The Law Society Council maintains that it is not appropriate to require firms to begin identifying cases for the FSAVC review until it is known whether access to this database will be available. Therefore, until further notice, firms will not be required to begin the review process unless a request from a client to review an FSAVC is received, in which case the firm must:l Notify the pensions team of the monitoring and investigation unit at the Office for the Supervision of Solicitors and request a copy of the FSA's guidance.l Conduct the review in accordance with the FSA's guidance on a timely basis and keep the pensions team advised as to the progress of the review.Solicitors requiring further information, or a copy of the FSA's guidance, should contact the pensions team, tel: (01926) 822154, or write to: The Pensions Team, Monitoring and Investigation Unit, Office for the Supervision of Solicitors, Victoria Court, 8 Dormer Place, Leamington Spa, Warwickshire CV32 5AE; DX 292320 Leamington Spa 4.