Legal & General says it will review its stance on selling with-profits, saying in the wake of impending regulatory ref-orms, such as the new realistic reporting regime, it has been forced to reconsider the types of business it sells.
L&G head of press relations John Morgan says it is not going to be withdrawing from with-profits as matters stand but will be looking closely at the FSA's suggested reforms which he says create “significant” issues for the industry, including the realistic reporting regime, PPFMs and treating customers fairly along with the “general weight” of regulation affecting with-profits sales generally.
He says L&G's issue is that the flexibility needed by management to run its £24bn with-profits fund appears to be being reduced. The firm has already said it will not be participating in any smoothed product concept, as envisaged by Sandler.
Rival with-profits provider Prudential says the reforms and discussions have been going on for some time and that throughout it has said it is committed to the with-profits product and remains that way.
Morgan says: “The reforms as they stand will reduce management flexibility in running with-profits and therefore companies would be reviewing their position in the market.
“We are saying that we will review the with-profits products once we know exactly how these reforms turn out.”
Informed Choice managing director Nick Bamford says: “This is part of the general spiral of decline of with-profits. Providers are waking up and seeing that what Standard Life are going through we have to go through ourselves. These factors are likely to make insurers look at such internal reviews.”