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moore&#39s code

So, the man from the Pru is swapping his shiny suit for a pair of corduroy trousers and a casual shirt, which he will wear to nip down the DSS to pick up his giro. He will be joined by the man from Sun Life Financial of Canada, who found out just days afterwards that he too was “uneconomic”.

Nobody was really surprised when Jonathan Bloomer decided to take the axe to the salesforce which was once a mainstay of the financial services industry. Mr Bloomer insisted that the Man from the Pru was not going, he had merely changed and would be replaced by the telephone and internet men from the Pru – Techno Pru if you like.

But this is a little disingenuous. That brand was one of the few within financial services to have reached icon status and that brand represented the salesforce. Make no mistake, the man from the Pru is no more.

While it is an image that rather amuses me, I doubt our former men from the Pru and Sun Life Financial of Canada will spend much time queuing up with the unfortunate steelworkers from Corus at the DSS. No, they will probably pocket a handsome payoff which will no doubt be followed by a series of lucrative proposals from the likes of Bankhall, InterAlliance, Misys IFA Services, Zurich and the rest.

The interesting question is whether we should mourn his passing. Towry Law&#39s Clive Scott-Hopkins clearly does regret it, competitor or not. He has talked of the hundreds of thousands who have been grateful for home-service insurance over the years. He goes as far as saying: “A national institution has been killed off by the cost of personal services and bureaucratic requirements which the consumer is not apparently prepared to pay or which the Government says is too expensive and not necessary, and they should know best.” I am not convinced.

Neither Pru nor Sun Life Financial has covered themselves in glory in recent years. Pru&#39s salesforce missold more personal pensions than any other. Sun Life Financial of Canada managed to pick up a then record fine from the PIA in 1998 – something Pru avoided by the neat footwork of its former chief executive Mick Newmarch, who decided to avoid the PIA and be regulated direct by SIB instead. The same SIB that could not issue fines and had to content itself with a stinging rebuke.

Pru, of course, is a very different animal today, changing from a bloated behemoth of the life insurance industry into a whizzy operation which makes more than half its profits from overseas, notably the US.

It is less clear where Sun Life Financial is going.

But despite their past sins, the demise of the salesforces raises an interesting issue.

The Government is desperate to increase pension saving in the UK because it does not want to pick up the tab. Many of its financial services reforms have been laudable. The UK consumer has seen charges plummet and some of the industry&#39s more repellent practices have been banned.

I do not mourn the demise of the direct salesforce. I believe the commission-based remuneration that has operated in financial services has been responsible for a number of ills. I declare an interest here as I was, some years ago, a victim.

But the danger for the Government – and, yes, the industry – is that little thought has been given to a realistic and workable replacement which will ensure that the punter is protected while the distributor gets a decent reward.

I am a firm supporter of fee-based independent financial advice but am not so naive to believe that the vast numbers of people who, in the past, have paid commission, will all be willing to switch – particularly those at the lower end of the income scale.

The products that the financial services industry offers, thanks in many ways to Government and regulatory action, have been improving for some years now. The difficulty is getting the punter to buy them. Pensions, life insurance, savings, are not something that one buys on a whim.

People need a push. Life offices may talk excitedly about internet and telephone sales but these channels require the punter to make the effort and it is far from clear whether the same number of people who dealt with salesforces will be willing to make that effort.

IFAs are growing, but I suspect many will be finding their businesses under pressure while the number of people selling long-term savings is well down on 10 years ago.

It is not inconceivable that solutions could be found to the current dilemma but these solutions need careful thought on all sides of the debate. If the Government really wants to increase private pension provision it needs to address the issue of distribution.

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