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CAR crash as Skandia slams ‘desperate’ life offices

Skandia has hit out at the Association of British Insurers’ call for customer-agreed remuneration to be mandatory for advisers but not direct sales, saying it is based on the self-interest of “desperate old traditional” members.

Skandia chief executive of UK business Brett Williams says CAR is a fundamental principle that must apply to the whole market to provide clarity and choice for consumers.

He criticises those product providers which he believes are simply trying to protect their own interests.

Williams says: “I think there is a lot of self-interest from quite desperate old traditional life and pension providers who are struggling to see their place in the world. This is behind quite a lot of the information that is coming out from these people.”

In its response on the retail distribution review, Skandia says that it is the principle of CAR that is important rather than the debate over commission and fees.

It says: “What form it takes should be decided in conjunction with the client, depending on what is most suitable and appropriate in each individual case. If remuneration is being paid out of the product in the form of commission, it must match the service being provided, both in amount and timing.”

Skandia has proposed two categories for distribution – advice and no advice – and says CAR should be mandatory across both channels.

ABI spokesman Jonathan French says there is not a great deal of difference between Skandia’s submission and the ABI’s position.

He says: “We all agree there needs to be more transparency, greater professionalism and a clear demarcation between advice and non-advice sales.

“What is at the heart of the issue is that any provider of advice must be able to demonstrate it is free from bias. CAR is the way to do it in the IFA sector but it will not necessarily work in other areas such as tied advice.”


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