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David Barral

Norwich Union’s distribution director believes a key way to restore consumer confidence in the industry is for multi-tied advisers and IFAs to build closer relationships which would help them better target the right people and improve persistency.

The industry’s reputation is at a multi-generational low,partly because in recent years profits have been put before customer needs, says Norwich Union distribution director David Barral.

The avid Manchester United fan believes a key part of the solution is for providers and advisers to work together more closely to devise products which people want and need, and the advent of multi-tie could well be a conduit for this co-operation.

Barral is very passionate about the industry and protective of its reputation. He says working in the sector was something to be proud of when he first entered financial services over 20 years ago but not so in recent years.

“Even people in the industry lose sight of the business we are in and get caught up in the negativity around it. The fact is we do help people match their financial goals but we really need to get back to designing products that really meet the underlying needs of the end-consumer.

“We have spent the last two years on competitive selling but many people would rather put their money under the mattress or in property than in the financial services industry,” he says.

While he recognises there are serious problems with how the industry operates, at times, and its perception in the media, there is a lot of good done which goes largely unrecorded.

For example, NU recently made a discretionary payment to the husband of a woman who committed suicide, leaving him a widower with three children. We were also the first insurer to pay out to the relatives of a tsunami victim where the body had not yet been found. He also notes that the industry did a lot of good work behind the scenes in the aftermath of such disasters as Piper Alpha and 9/11. “The industry can be a force for good, we just need to redress the balance,” says Barral.

Despite this trust problem, the industry still wrote 7.8bn of new business last year and given the size of the savings gap, with estimates running as high as 60bn, he believes restoring consumer faith will pay huge dividends for both parties.

He feels a key way to achieve this is through building closer relationships with IFAs, who have much closer contact with the end consumer. Indeed, around 75 per cent of NU’s business comes from the adviser channel.

“Going forward, the industry needs to provide more help for the distributor, such as sharing research and helping them better target the right people and improve persistency. We are a manufacturer before a seller, with a strong consumer brand. We invest a lot in the brand to create a consumer pill for the adviser but need the adviser to sell,” says Barral.

As a provider, NU has no real issue whether money comes in from multi-tied advisers or IFAs, and Barral sees a strong future for both. The multi-tie channel, however, does throw up opportunities to work more closely with advisers, he says.

“Advisers might argue that lots of providers create competition. The downside is there is no compelling reason for advisers and distributors to work together. Multi-tie provides a catalyst for that to happen,” says Barral.

“If you are talking about five providers on a panel you have to get that right. If each company is providing 20 per cent of your cheque, not 2 per cent every month, then the incentive is there to build the relationship.”

Sorting out commission is one aspect of the relationship providers and advisers have to get right. NU will pay 600m in commission this year and the industry as a whole will pay 5bn. The majority of NU’s adviser remuneration is indemnity commission, which has recently come under attack from the ABI.

Barral believes consultation is needed on how and why commission is paid as part of the industry’s wider aim of restoring consumer confidence. “The media come back at commission time and time again. We need to manage perceptions and create huge hearts and a mind shift on commission which we will not do by defending it,” he notes.

Basically a means of ensuring the payment of commission and the advice process can be clearly seen to be distinct.

The issue is set to rumble on and finding compromise looks particularly difficult when the main protagonists, the ABI and Aifa, have taken such confrontational stances against the other.

Barral’s preferred solution is an industry led one with indemnity commission – effectively a loan or advancement of future commission against future premiums being paid to an independent financial institution – which could then distribute it – effectively creating an arm’s-length relationship between commission and the sale of the product. “IFAs would still get the commission, just from a different source. Pass loans were an industry driven initiative funded through banks and, given that it has been done before, conceptually, it can be done again, albeit this would be on a larger scale,” says Barral.

When not devising NU’s distribution strategy, he prefers to wile away the hours playing golf or taking the family skiing. Now his youngest boy has reached seven, he is old enough to hit the slopes and is happily being taught downhill skiing by his father.

Time pressures mean it is difficult for Barral to get to see Manchester United as often as he would like but there is still the games on TV which tend to keep him away from those plans of taking up running.

His drive to ensure NU is well-positioned on multi-ties have seen him secure several tie-ups, including links to 19 building societies, FundsNetwork, Tesco and Royal Bank of Scotland.

Barral is confident that NU will keep its dominance of the provider market after depolarisation and is adamant that there is ample space for multi-ties and IFAs but says both will have to pull together if they are to restore confidence in the industry.

Born: East Kilbride, Scotland, 1962Lives: Harrogate, North Yorkshire with wife and childrenCareer: 1979-81: Commercial Union new business life clerk; 1981-84: Guardian Royal exchange claims negotiation; 1984-86: insurance broker; 1986-95:Eagle Star; 1995-99:Prudential national sales manager; 1999-2000: Norwich Union national sales manager; 2000-2003: Norwich Union director of IFA Development; 2003: Norwich Union director of IFA; 2004: Norwich Union director of distribution

Interests: Playing golf, watching football and spending time with his family

Likes: People with honesty and integrity that are passionate, committed and get things done

Dislikes: People that are all gloss and no substance and fence-sitters

Life ambition: For my wife and I to see our children grow up happy, healthy and independent

Heroes: The two women in my life, my wife for bringing up our three boys and my secretary for carrying out the unenviable job of organising me

Drives: BMW 5 Series

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