View more on these topics

Just Retirement attacks single-tie annuity distribution deals

Just Retirement director Steve Lowe has slammed single-tie annuity distribution deals being arranged between pension providers and networks, warning they are likely to offer consumers a bad deal whilst being unsustainable for the network.

Last month, Money Marketing revealed that providers are paying significant amounts of money to distributors as part of long-term distribution deals ahead of the RDR. These included a proposed £2m, five-year payment from Aegon and Caerus for “sales and marketing activity to support our partnership”, although Aegon says the final deal was agreed on different commercial terms. The pair have a single tie pensions deal.

Lowe (pictured) says: “I am concerned that there is increasing evidence that networks planning restricted advice services are looking to sign single-tie agreements with providers ahead of the retail distribution review.

“Providers are keen to set-up single-tie deals because it guarantees distribution and networks, facing the loss post-RDR of sponsorships and commission, are attracted to extra revenues.

“But from the adviser’s perspective, being tied to selling products that are not competitive is a huge disadvantage, potentially choking off the oxygen of new business both adviser and network rely on to survive.

“It is important advisers are clear whether their clients could end up with poor value deals and understand the risk that could bring to their practice given increasing competition from comparison services.”

Lowe also says single-tie agreements run counter to Government efforts to increase the number of people who shop around for a retirement income.

FSA rules on adviser-charging under the RDR state that, from 2013, adviser firms can accept client charges but will not be able to accept “any other commission, remuneration or benefit of any kind in relation to any personal recommendation that they make or service related to it”.

Last week, Standard Life raised concerns about providers making payments to be part of a restricted advice arrangement and called for greater transparency.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Here we go again. Yet another unintended consequence of the RDR. When with the FSA realise this “bureaucratic monster” is goingto be the cause of more consumer detriment than it once was supposed to remove. Its pathetic that they wont stand up and say ” we have got this wrong and need to totally revamp it to a more simplistic and credible model that will work for the consumer and industry”. Hector if you any decency in you for God’s sake admit you are wrong and put a stop to this before hundreds of thousands suffer untold detriment. The industry will think you honourable and repsect you more for the admittance of error after error. Noone will think worse of you or your organisation for delaying the RDR for the sake of the consumer.

  2. Along similar lines IFAs need to be alert to the fact that Friends Provident, under its new aggressive consolidator owner Resolution, are now writing to our clients to offer them the potential of an improved annuity through their single co tie-in as introducer to Partnership Assurance.
    So the worm has turned and a business which always serenaded the IFA fraternity who accounted for around 75% of all their new business will now seek to take the introducer commission and cut us from the loop. Advisers be aware, the gloves are coming off as these old insurance providers lose market share and start moving into new areas in direct competiton with us! Oh yes and how can a single tie offerring be treating customers fairly when true open market option will embrace at least four other enhanced annuity providers!! Buyer beware

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com