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Commentary – unchained melody

Norwich and Peterborough Building Society has a reputation for innovation and being first to market with customer-focused propositions, from its best-buy Gold current account and award-winning internet banking service to its latest offset mortgage which allows customers to link both current and saving accounts to their loan. The society prides itself on the wide range of products and services it provides.

Possibly its boldest move came last October when it broke its tied status with Norwich Union to become a mutual IFA.

Since the Financial Services Act 1988, N&P has offered two distinct services – branch-based advice as an NU appointed representative and independent advice through Norwich and Peterborough Financial Services. These two businesses were merged last October to form Norwich and Peterborough Financial Advice Service.

Depolarisation offers significant opportunities for change and repositioning of distribution. In 2001, N&P undertook research to assess the best way to take advantage of these shifts. Senior management felt there was an opportunity to capitalise on the society&#39s position as a substantial mutual with a trusted branch, contact centre and internet distribution network to create a new type of player – a mutual adviser and multi-product distributor able to drive value from its independent customer-centric positioning.

As a mutual owned by its customers, a key driver for any decision was how current and potential members would react to the choices offered. Extensive qualitative research showed:

•Customers recognised the need for face-to-face financial advice. While there was confusion over tied versus independent advice, when the differences were explained, the wholeof-market approach was universally seen as the preferred route.

•Access to a high-street IFA was positively received although the flexibility to meet a customer at work or home was also seen as important.

•The combination of being mutual, the strength of the N&P brand and the offer of a whole-of-market approach to providing financial advice was seen as a very powerful position for N&P to take.

A lot has been achievedfollowing the launch:

•The merging of two distinct businesses.

•The delivery of a fully computer-based fact-find process.

•The creation of an automated research and suitability system which links with the frontand back-office systems.

•Extensive training and testing to move our advisers from tied to competent independent financial planners.

•The creation of a training and competence scheme which supports ongoing development of advisers and managers.

• The development of a robust in-house product and provider selection process to help IFAs give best advice, underpinned by the experience of Old Broad Street Research.

• The development of a compliance and admin function, using a back-office system which is ready for straight-through processing to providers, which supports our advisers and has capacity to support other distributors who have or want to establish an IFA business.

• The development of management information systems which provide detailed and electronically auditable analysis of the advice we provide, the competence of our planners and our commercial progress.

N&P now has a high-street-based advice proposition offered through 56 branches, mainly in the East of England, that is growing steadily. Our branch staff and advisers feel more confident than ever that they are providing an holistic and well researched service that customers want and value.

The fact-find system is popular with customers as it is not product-based. It gathers information interactively and with customers&#39 perspectives firmly in mind. It provides graphical and pictorial explanations to highlight needs and compare investment opportunities. N&P believes they will not find a more advanced customer-focused system which supports so successfully the exploration of all their needs.

Sales are growing and N&P sees broader planning needs being catered for. This growth means the society is looking to recruit another 20 IFAs to its team. We are looking for advisers who have at least two years&#39 IFA or tied experience with FPC/AFPC qualifications. Prospective advisers are attracted by the combination of mutual and independent advice. Selling such a customer-driven service has strong appeal.

Clearly, the most important consideration to N&P is how customers have reacted and that is only positive. The society has new customers who would not have considered N&P before and those who meet with a financial planner are buying more products. The average amount invested is growing, demonstrating confidence in the society&#39s advice.

Launching this service at a time of flat interest in investments has been challenging. However, as the housing binge comes to an end and customers realise that they have to get back to saving for tomorrow rather than borrowing for today, the society believes it is in a strong position to benefit from the distribution changes that depolarisation will bring.

Matthew Bullock is chief executive of Norwich and Peterborough

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