Scottish Life confirms continued strong demand for transparent remuneration structures
Wednesday, 4 June 2008
Five years after introducing its version of Customer Agreed Remuneration (CAR), in May 2003, Scottish Life, the pensions specialist arm of the Royal London Group, has found that support from advisers for transparent, fee-based remuneration structures is stronger than ever.
Recent figures show that 93%* of Scottish Life's new regular premium individual business is now being written using a fee-based structure (ie a traditional fee or Financial Advisers Fee). This compares with 50% in May 2004 and 87% a year ago. The remaining 7%* of cases use the traditional initial commission basis.
John Deane, Chief Executive of Royal London's Intermediary Division (which includes Scottish Life), comments:
"We believe that the use of CAR models, such as our Financial Adviser's Fee, offer a fairer, more transparent and more sustainable solution than traditional initial commission models. With CAR, the adviser and client agree payment at the outset and it is charged upfront, rather than by increasing the annual management charge (AMC) over the life of the plan. The fee-based model also ensures that products are judged on their merits, rather than on the level of commission paid, making it easier for advisers to prove their compliance with Treating Customers Fairly principles.
"Some people have suggested that the Retail Distribution Review (RDR) Interim Report was lukewarm on CAR but we totally disagree. The FSA clearly state in the Interim Report that 'product providers have no role in determining remuneration'. The report goes on to say that the FSA is 'challenging more product providers to change their business models so that they do not determine how much advisers are paid'.
"Our experience with the Financial Adviser's Fee over the last five years demonstrates that IFAs and their clients react positively to a fair and transparent fee-based remuneration structure and we are delighted that CAR continues to be at the heart of the RDR proposals."
-ENDS –
*93% of Scottish Life's individual regular premium new business is currently being written using a fee-based structure, primarily the Financial Advisers' Fee commission option. The remaining 7% of cases use the traditional initial commission basis.
Source: Scottish Life figures for the six months between October 2007 and the end of March 2008
For further information please contact:
Scottish Life
Alasdair Buchanan
Head of Communications
Tel: 0131 456 7133
Polhill Communications
Jenette Greenwood
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 1,190 staff are employed, with 460 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
- Fundsdirect / Ascentric – funds supermarket; Wrap Platform
Royal London is the largest mutual life and pensions company in the UK with Group funds under management of £32.6 billion. Group businesses serve around three million customers and employ 2,630 people.(Figures quoted are as at 31 March 2008).