Advisers are being called on to embrace the Association of British Insurers’ proposal to move to factory gate pricing as a way of adding more value to their businesses and improving the industry’s reputation.
Speaking to a packed audience at Money Marketing Live in London last week, Royal London chief executive Mike Yardley said he believes the ABI’s response paper to the retail distribution review is proIFA and addresses important questions about openness and disclosure.
He said factory gate pricing is a step in the right direction for the majority of advisers by offering them better value and important flexibilities.
Axa Wealth Management and Winterthur Life chief executive Mike Kellard agreed with Yardley over factory gate pricing but said the ABI’s paper could have added more details to reassure advisers.
He said: “The danger in the paper is it does not talk enough about the graduality of the move and the fact that one size does not fit all. There will be a gradual move away from untransparent remuneration but for the foreseeable future, for many clients, this could be the best way for many to be sold products.”
Norwich Union head of distribution development Stephen Gay said factory gate pricing is a solution to many of the industry’s problems and is not about getting rid of commission.
Gay said the ABI’s planned Caris model for factory gate pricing should be applied to all organisations that hold themselves out as offering professional advice, whether IFA, multi-tie or single-tie.
Gay said: “If you take the view that factory gate pricing is a good idea, which I do, it should apply to all those that say they provide professional advice. This transparency should apply equally if a client goes into a bank or IFA. They should have no less rights. It focuses both the provider and the distributor on the end customer rather than on the politics of commission.”