Commission paid to advisers is an “open sore” that continues to undermine confidence in the insurance industry, ABI chair and AXA UK group chief executive Paul Evans says.
Speaking at the ABI retirement conference today, Evans said it is “humiliating” that the insurance industry is less trusted than banks and estate agents.
He said: “We will be pushed aside if we do not rapidly re-earn the trust lost over past decades. Decades during which the business model was different because of adviser commission, the legacy of which is an open sore that continues to undermine trust in what is now a completely diffferent proposition.
“That our sector has lower consumer trust than the banks with all their troubles, is embarrassing. That we are trusted less than estate agents is frankly humiliating.
Regulation is also preventing insurers dealing with customers trapped in old pension plans that offer poor value for money compared to modern products, Evans said.
The ABI has previously called for the Government to make a “bold” move and grant providers the power to bulk transfer customers out of legacy schemes without having to get consent.
Evans said: “Wouldn’t it be wonderful if we could upgrade our customers to our latest pension offering? There’d be commercial challenges with some legacy products, but surely that would be more than offset in the costs of maintaince of the IT systems many of us have to maintain?
“Instead at the very notion of an upgrade, regulation steps in with a new advice point.
“We should be able to offer our existing customers our latest digital products while rapidly decommissioning old systems, enabling us to reduce cost.”