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Clerical&#39s service holds a lesson for IFAs

Clerical Medical&#39s blunder in sending incorrect pension valuations to over 2,500 policyholders has once again highlighted life offices&#39 apparent inability to provide an efficient service to IFAs and customers.

It is an issue that has assumed particular relevance now that depolarisation is likely to blow existing distribution arrangements out of the water.

But the problem is far from new and the Clerical case has simply given IFAs a platform on which to vent their spleen on a more general basis over the poor service they endure on a day-to-day basis.

Informed Choice managing director Nick Bamford says: “The length of time it takes a provider to perform the most simple task is extraordinary. Even something like receiving a letter of confirmation can take around five days and I would be chasing them to get it in that time.”

Speak to any number of IFAs on the subject of poor service and the same names – Norwich Union and Axa Sun Life – crop up again and again. Complaints range from the length of time both companies take to get answer straightforward queries to their seemingly arcane automated phone systems.

Roberts Clark director Jo Roberts says: “Norwich Union is the worst, just appalling. We have done a little survey and found that we have to wait for an average of eight minutes before they even answer the phone. We have complained but they just say they are busy but it is at any time of the year.”

In an effort to gain some recompense for the delays, Roberts now adopts the policy of billing providers for any extra work she has to do as a result of their service failures. She currently has nine outstanding compensation claims and expects to win them all.

But no matter how much compensation Roberts may get from the providers, there is no doubt that IFAs would rather receive better service.

Rickman Tooze IFA John Hainsworth says one of his clients recently wanted to find out the values of two Scottish Equitable pension policies. He was able to find out the value of one immediately but was told that the other would take 10 days.

He says: “I was staggered. It highlights just how much of providers&#39 pension business is still being administered manually, which means slowly. But none of them wants to admit it. They do not want us to know how much of their processes are done by hand.”

Hainsworth says the lack of technology in many back offices could have an adverse impact on providers themselves. With the restrictions of the 1 per cent regime, he believes that the expense of employing a raft of employees to perform admin tasks manually is simply not commercially viable.

But there is perhaps an even more pressing reason for providers to make the effort to turn round their service standards. With depolarisation seemingly a foregone conclusion, life offices are elbowing each other aside to secure distribution before their existing arrangements are rendered obsolete.

Many IFAs believe their efforts could be in vain as the providers with the poorest service are likely to be overlooked by advisers seeking to multi-tie with a company with a better track record.

Bamford says: “Any IFA considering multi-tying will have made a mistake if they tie to a provider with bad service. Generally, providers will at least listen to what an IFA has to say on what they could do better, even if it goes no further. But once they have signed on the dotted line, they have lost their voice and will have to play by different rules.”

Clerical, ironically, agrees that poor service should be frowned upon by IFAs considering making the switch to distributor. Head of strategic marketing David Shelton says: “The decision should definitely be related to service. Any IFA&#39s criteria for multi-tying should be, first, the financial strength of the provider and, second, its level of service. Both should come before the actual details of the multi-tie agreement.”

But not all IFAs agree with this assessment. Roberts says: “Being tied is a lot easier than being independent. There tend to be dedicated support staff, which really improves things with providers.

“It could be that multi-tying goes some way to boosting service levels.”

However, Roberts does concede that, all things being equal, she would plump for the provider with the better service if she were seeking a multi-tie agreement herself.

Despite these warnings, IFAs are not expecting the situation to improve in the foreseeable future. But by heeding the advice of their peers – and, indeed, Clerical – those IFAs who are looking to multi-tie could inadvertently force up standards by spurning the advances of providers with the worst service records.

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