Scottish Life provides RDR package to help IFAs
Monday, 13 August 2007
Scottish Life, the pensions specialist arm of the Royal London Group, has launched a new website and accompanying report to help intermediaries assess the potential impacts of the Retail Distribution Review (RDR).
Located at www.scottishlife.co.uk/rdr, the report looks in depth at two key areas -- the future shape of the advice market and the future of adviser remuneration. Throughout,, Scottish Life's views on various elements of the Review are made clear, to help form a basis for discussion.
Some of the key views the paper draws are:
in general Scottish Life welcomes the RDR as a strong and valuable document that will form the basis for discussion over the months ahead
in particular we are pleased to see the debate on transparency of commission move forward and broadly support the principle of Customer Agreed Remuneration (CAR)
we welcome moves to increase professionalism in our industry but have concerns at an over-reliance on academic qualifications
we are very concerned about the suggestion of having no price-cap on Primary Advice products, which could lead to consumer detriment
we believe that the definition of independence should include a whole-of-market proviso as well as incorporating the new definition of fee-based remuneration. We welcome reports that FSA are moving away from the narrower definition suggested in the RDR.
Some of the possible effects of the RDR could be:
the advice market could be squeezed in the middle like an hourglass. The General Financial Adviser category looks to be relatively unsustainable and unattractive, leading to a potential defacto polarisation of the market between Professional Financial Planner and Primary Adviser status
the practice of providers defining commission as an arbitrary percentage of premium will become increasingly difficult and charges for advice are more likely to reflect the commercial value of work done
clients will find it easier to understand how commission affects their plans and will more readily be able to ascribe value to the service their adviser provides
Primary Advice will be attractive to banks and their insurance company subsidiaries. We note that some have already started to purchase distribution in advance of RDR changes and we expect to see a resurgence of direct sales forces (although they may not be called that any more).
Commenting on the launch of the report, Mark Polson, Head of Corporate Business at Scottish Life, said:
"Since the RDR was published there has been a great deal of comment, some of which has been remarkably uniformed. We have tried to take a dispassionate look at a couple of key areas and give our opinion on where things may go. It's important to remember that this is only a Discussion Paper and we would expect a number of changes to result from the current consultation. But it's pretty clear which way the wind is blowing, and as independent-only market-leaders in factory-gate pricing / CAR we believe we are well placed to offer informed comment.
"We've placed our analysis on the internet so it's easy to access and download. We have also set up an email response forum -- rdr@scottishlife.co.uk -- where advisers can let us know their reactions and ideas for the future of our industry. We'll publish the best of these responses on the forum and try to move the debate forward from there. This is a further demonstration of Scottish Life's commitment to the independent intermediary market - after all, we have no other form of distribution."
The site, which forms part of Scottish Life's acclaimed Technical Central online resource, also includes an interactive decision-making tool which has been designed to help advisers work out where they might fit in the new advice regime.
Finally, Scottish Life has committed to providing further analysis on the RDR and associated matters as time goes on, and welcome suggestions from advisers on particular subjects they would like to see covered. Mark Polson will also be appearing at a number of regional Scottish Life seminars in late summer and early autumn to discuss and analyse the RDR, Personal Accounts and the impact these may have on corporate pension markets in particular. Advisers who wish to attend one of these seminars should get in touch with their normal Scottish Life contact to indicate their interest.
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For further information please contact:
Scottish Life
Alasdair Buchanan
Head of Communications
Tel: 0131 456 7133
Mark Polson
Head of Corporate Business
Tel: 0131 470 1365
Polhill Communications
Jenette Perry
Tel: 020 7655 0530
Editor's Notes:
Scottish Life was founded in 1881 in Edinburgh as a proprietary company, becoming a mutual company in 1968.
On 1 July 2001, Scottish Life demutualised and transferred its business to The Royal London Mutual Insurance Society Limited. Scottish Life is a division of Royal London and is the specialist pensions business within the Group, providing individual and group pensions to the market via intermediaries.
Scottish Life and Royal London's other intermediary businesses are based in Edinburgh where 1,200 staff are employed, with 190 working in other parts of the UK and overseas.
Royal London Group is a specialist financial service provider. Its businesses focus on those sectors of the market which value premium propositions, operating through a number of brands:
- Scottish Life – UK pensions market
- Bright Grey – UK protection market
- Scottish Life International – offshore investment markets
- RLAM – fund management
- RLAS – life and pensions administration
Royal London is the largest mutual life and pensions company in the UK with Group funds under management of £32.7 billion. Group businesses serve around three million customers and employ 2,570 people.(Figures quoted are as at 30 June 2007).