He told Money Marketing’s at-retirement round table: “I am willing to wager there will be significant movement in the next 12 months. The noises we are getting from the FSA are a lot stronger than we have had in the past. Even the noises we are getting from the Association of British Insurers, which in many cases fights the corner of deeply established providers, shows it recognises that we have got to move on this.
“You have the FSA, the new providers in the market and the media all supporting change. I sense there is a lot of momentum pushing for change.”
McPhail said he sees major differences between those life offices which are still open for business, with Standard Life being most efficient, and those that are closed. He gave the worst example as Windsor Life.
Partnership Assurance sales and marketing director Ruth Clarke said: “We have noticed that where administration has been outsourced, if service level agreements on those third-party administrators are relaxed to keep down costs, automatically you have created problems for your customers.”
But McPhail said there will be ways to make life offices behave responsibly under the FSA’s treating customers fairly initiative. He said: “There is a course of action the FSA can take, that is not just fining them but ultimately getting the shareholders to care. If they think it will have an impact on their dividends, you can get their attention.”