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Carry on churning, says ABI chief Haddrill

Association of British Insurers director general Stephen Haddrill says churning is essential to drive competition and financial services is the only industry where a degree of churn is not seen as positive.

Speaking at a Labour party fringe event in Manchester on Tuesday, Haddrill hit back at FSA chairman Sir Callum McCarthy’s claims that the financial services business model is failing because of too much churning caused by the lure of commission.

He said churning can foster innovation and competition should create an amount of switching which can be justified as more than just the result of commission payments to advisers. He said this has been seen in several market sectors, such as phone or electricity services, with financial services the only market where it is not welcome.

Haddrill admitted there were some features of the existing market which are not serving the industry or the consumer well but this did not support the strength of the view in McCarthy’s recent speech, he said.

Haddrill said: “It does seem to be the only market in the world where a degree of churn is not seen as a good thing. If you talk about telephone services or electricity services, you argue there should be competition that should lead to people switching from time to time. And that should happen in the financial services market just as much as in any other market so I reject what lies behind Callum McCarthy’s thesis.”


Victoria range aims to cut costs for borrowers

Victoria Mortgages says it is ready to pass on internal cost savings to borrowers from Monday.It is targeting the near-prime and light adverse markets with new deals, after revealing in August that it plans to triple business over the next 12 months by reducing rates.The near prime range allows for £500 of unsatisfied CCJs and […]

IMA calls for new ideas on annuities

The Investment Management Association says responsibility for annuities should be taken away from Revenue and Customs and moved to another Government department to produce more coherent pension policies. Speaking at the FSA’s annual asset management conf-erence in London last week, chief executive Richard Saunders said there needed to be new thinking on annuities as current […]

New Star staff cash in 40m in shares

New Star Asset Management employees have cashed in around 40m-worth of shares, with speculation that fund manager Alan Miller, who is on a sabbatical, may have sold up to 15m in stock. New Star managing director Mark Skinner has also sold over 310,000 shares, netting him nearly 1.185m. Staff who bought shares in the group […]

What exactly is product innovation?

By Fiona Tait, Pensions Specialist Ros Altmann reportedly hoped for more product innovation following pension freedom¹ and, according to one poll, 66 per cent of advisers also believe that providers should be doing more². This article considers whether there is a real client need for new products, or whether we should be focusing our attention on efficient delivery […]


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