This morning, Resolution and Friends Prov announced they are recommending Resolution’s £1.86bn acquisition offer to shareholders.
Friends Prov says Resolution has addressed its concerns regarding corporate governance including agreeing to a primary listing on the London Stock Exchange.
But Jacobs says he has stopped recommending Friends Prov due to concerns about Resolution’s intentions.
He says: “I have sent an email around to everybody in my office saying that until further notice we are not recommending Friends Provident. Resolution is a predator. I am worried enough about my clients with Friends Provident let alone putting new clients there. What record have they got? How do we know whether they will be any good?
“The only reason Clive Cowdery has bought Friends Provident is price. He is not concerned about the customers he just wants a return on the money. Until I see it working there will be no new business from me. It just frightens me.
“My real fear is that we will lose everything we have built on over the last decade with Treating Customers Fairly and the lessons from the banking crisis that chasing profit alone is the quickest way to collapse.
“We need some of these institutions to put customers first because if they do not greed takes over. Insurance companies are really going to have very little market left if they are not careful. Resolution is going to want financial returns quickly, which I am afraid does not mean treating customers fairly.”
Evolve director Jason Witcombe warns that service levels could be affected by the move.
He says: “With any takeover, the company is being taken over with the view to squeezing costs as much as possible and improving profitability and therefore there is a reasonable chance service levels will go down. Friends Provident has always had a pretty good reputation for service levels and it’s going to be hard for the new team to emulate this whilst trying to increase profit for themselves.”
“There are a few smaller niche players who definitely have their place but some of the larger insurance companies need to figure out what their role is. For companies trying to be all things to all people they’re perhaps losing their way a bit and that will probably lead to further consolidation, both in the insurance and investment house market as well.”
Annuity Direct chief executive Bob Bullivant says: “Friends Provident has always been a superb organisation in terms of the way it has treated customers. The only question mark is whether Resolution will try to change that culture and whether the way customers are treated will be affected. That said, they clearly needed to do a deal and maybe being the first in the Resolution stable is a good thing because I suspect Resolution will go looking for more.”
But Friends Provident UK managing director Simon Clamp says: “This is a business that has been set up and sold to investors as a new business consolidator.
“To be successful in the UK market it must win new clients and look after existing clients. If it does not then intermediaries will not deal with it and it will not be successful.
“This is not about buying up closed books. It is a new business consolidator and in the UK market which is mostly intermediated is has to be practical. To write new business you have to have relationships with distributors and look after those clients and there is not anything in the middle of that.”