When Legal & General and then Aegon left the Association of British Insurers in 2015, there were plenty in the market who saw this as a harbinger of doom for the trade body.
In the post-RDR world, pension providers and general insurers were coming up with a whole host of new business models.
How could they all come together as one when their directions, and what they might want from policy, differed so greatly?
ABI director general Huw Evans is bullish that allowing platforms to join is part of the solution to keep his organisation relevant. Having let in Hargreaves Lansdown last year, followed by Vanguard in May and pension consolidator PensionBee this week, Evans says the ABI is “open for businesses” for more platform members.
In an interview with Money Marketing, he says: “The long-term saving market is changing very rapidly, so the ABI has to change with it. We can’t be some sort of museum piece that represents the life market circa 1985.”
The overlap, for Evans, seems quite clear. After the pension freedoms, wrapped products are becoming increasingly popular with consumers as a way to access the flexibilities, and both insurer-owned platforms and independents have a “commonality of policy interest” with traditional life companies on issues such as taxation and auto-enrolment.
Yet some rifts do remain across the long-term savings arena. Aegon used its new-found independence to take the completely opposite position to the ABI over Financial Services Compensation Scheme funding. While the ABI fought against making providers pay a portion of advisers’ bills – and fought it incredibly vociferously according to sources close to meetings with the FCA – Aegon broke ranks with pretty much everyone else in the market.
Aegon turned out to be the winner of that battle. But while Evans is clearly disappointed with the FCA’s ruling, he says the ABI won’t be prioritising that fight any more.
He says: “On the FSCS funding, there was broad unanimity among the main providers in terms of opposing the proposals. You do have to manage disagreements sometimes, but that wasn’t one of those areas.
“But that issue is now done and dusted. We are not going to keep revisiting it. It is what it is, but I still think, as we have said many times, that while the FSCS always involves some degree of pooling across segments, people in their own segments should be incentivised to reduce the risks for their community.”
People in their own segments should be incentivised to reduce the risks for their community
While continuing to juggle relationships across the market, between members, non-members and the regulator, Evans says he is not afraid to pull punches, like on Solvency II in front of MPs on the Treasury select committee.
He cites the pension dashboard as an example of great collaboration across the industry – not so long ago, it was seen as something that would “never, ever happen in the UK”.
The only conflict left is with advisers, some of whom are disappointed that – initially at least – they will not be given delegated access to the output for clients, and argue that the £50,000 paid by providers for spots on the ABI’s steering panels could lead to commercial biases.
“People should be wary of big bangs when it comes to IT-enabled customer solutions,” Evans says. “I’ve always thought it would be a much healthier set-up for the dashboard, when it is enabled, to be enabled in stages to ensure that it works properly.
“I know some advisers don’t agree, but I think it is absolutely common sense in any form of IT-enabled solution, to implement things in increments, make sure that they work, then move forward accordingly – particularly when you are coming from a position where there is nothing there at all in the first place.”
“[Providers] clearly had a commercial interest in being engaged in how a dashboard could be developed.
“It’s in nobody’s interests for a dashboard to be developed that the industry doesn’t think would work. I don’t think it’s axiomatic that the overall project is skewed in one commercial interest or another. In fact, the range of people round the table was a guarantee that it wouldn’t be.
“I read some of the carping and I think we should just focus on the success of the project as a first step – it did what it was designed to do.”
It helps nobody for a dashboard to be developed that the industry doesn’t think will work
Now the prototype of the dashboard is up and running, Brexit is likely to dominate the trade body’s lobbying agenda for the foreseeable future. Evans sounds a little bit exasperated when he brings up the issue of cross-border pensions again, and that we have still yet to reach an agreement to give providers legal certainty that they will be able to continue to pay out on policies once the UK leaves the single market.
He says: “We still have the concern we are a long way behind where we need to be. We are still spending far too much time within the UK about what our negotiating position is, rather than having the negotiations with the EU about what we would like the end state to be and how we will get there. This needs to speed up and it needs to speed up quickly.”
“In the absence of an overarching agreement, how do you know what it is you are trying to fix? On something like Priips, you have a directive, so your compliance team can work through and operationalise, however costly, however expensive.
“I think the broader challenge around Brexit… is you can throw money at the problem now, but other than transferring contracts, which firms are already doing, you don’t actually know you are throwing your money at the right solution.”