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MM Profile: Stephen Gay

The Association of British Insurers’ new director of life, savings and protection believes the industry must learn lessons from the past and be prepared to act quickly when important issues appear on the radar Interview by Tom Selby

Stephen Gay’s decision to leave the top job at Aifa after just a year to take on the life, savings and protection brief at the Association of British Insurers sent shockwaves through the adviser community.

However, the former Aviva director of distribution says the driving force behind his decision is the same as the reasoning which took him to the Aifa director general role in December 2010.

He says: “The motivation is very similar. I am interested in the way this industry helps people. You can achieve that by the promotion of advice and by the way products and services are developed to provide a better deal for customers. There is an interplay between the two.

“I do not think we should ever see the advice community and Aifa as somehow pursuing a different agenda to the ABI. The issues are very often the same and the policy positions are normally aligned. A large proportion of business that ABI members receive comes from advisers, so in a way it is not a major departure for me to move from one organisation to another.”

Gay’s focus during his year at Aifa was, inevitably, the implications of the RDR. While his brief at the ABI does not directly cover the RDR, he retains an active interest, particularly where the reforms have implications for pension customers.

One of these areas is the provision of independent advice to people with small pension pots, with IFAs, providers and MPs voicing concern about the risks that a post-RDR advice gap could present to consumers. However, Gay admits policymakers are unlikely to give any significant ground, with the RDR deadline just eight months away.

“Anybody who is expecting the RDR to suddenly shift course a few months before implementation is probably being very optimistic indeed.

“We will not be holding out any such prospect to our members. The regulator has had plenty of opportunities in the past to amend aspects of the RDR.

“One of the lessons about lobbying is that you get maximum impact if you arrive at the debate very early, put forward constructive proposals and build cross-sector consensus.

“The RDR will not be the last time we have significant change in our industry. The lesson should be looking down the road to what things are coming next that feel currently at the edge of our radar screen. Because by the time they are at the centre of the radar screen, it will be too late.”

He says the financial services industry must seek to organise lobbying efforts quicker both at home and in Brussels to defend UK interests.

Gay plans to focus his lobbying efforts on concerns that the Test-achats ruling, which will ban gender pricing in insurance contracts, is seen as a forerunner to future rulings on disability or age discrimination.

“Test-achats is telling us there are cultural perspectives in Europe that mean fairness and equality are seen as the same thing. Looking down the road, there is a risk the European agenda will take the Test-achats judgment into other territories such as disability or age.

“That is something we need to be addressing now because the ramifications for critical illness and life insurance are potentially huge.

“We should not assume the way we view things in the UK is the same as other countries in Europe. For example, in Spain and Portugal, it is already illegal to ask about people’s family history, which is something we at the moment take for granted.”

Gay’s first task on joining the ABI was to dispute the findings of a report from the work and pensions select committee calling on the Government to remove Nest’s restrictions “as a matter of urgency”.

The scheme, which was set up with the aid of a Government loan, is shackled by a £4,200 cap on annual contributions and a ban on transfers in and out. The restrictions are due to be reviewed in 2017.

“There are competition issues here because Nest was established with the aid of a Government loan. The concept of Nest was it would have public money in order to deliver a pension scheme that would fill a gap in the market providing for people of more limited needs.

“It was not designed to take public money to set up a pension scheme to compete in an area of the market that already has plenty of provision from the private sector.
“In reality, the contribution cap only limits people who earn more than £50,000. It was not part of the great scheme of things to use public money to provide more pension choices to people earning more than £50,000.”

Away from the cut-throat world of political lobbying, Gay remains a passionate advocate of financial education in schools, a passion he shares with ABI director general and Personal Finance Education Group chairman Otto Thoresen.

Gay says: “If we want to fix the future, we have to start with the people who are the future, which is young people.

“I do an enterprise week at a school in Coventry once a year and you would be amazed at some of the things these teenagers develop, so we should not make patronising assumptions that finance and business issues are not interesting to young people because in my experience they are.”

Born: 1961
Lives: Rugby
Education: University of Southampton, studying history and politics
Career: 2012-current: ABI director of life, savings and protection 2010-12: Aifa (director general), 2006-10: Aviva (director of distribution development), 2002-05: Independent Consulting, 1998-2002: Cap Gemini Ernst & Young, 1991-98: Prudential, 1986-91: Standard Life, 1982-86: Providence Capitol
Likes: Initiative and reliability, skiing, rugby, good wine
Dislikes: Prunes, Ricky Gervais
Drives: Land Rover Discovery
Book: The Millennium Trilogy by Stieg Larsson
Film: The Thomas Crown Affair
Album: The Script

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