View more on these topics

OUutside edge

The life industry&#39s attempts to deliver decent customer service are as laughable as Basil Fawlty&#39s bid for the Hotelier of the Year award. It is a dismal reflection of where we are that an annual statement (where available) is considered a pinnacle of achievement for many. This is not customer service, it is merely the equivalent of being told how much you have to pay when you get to a supermarket checkout.

Before the industry even begins to consider the way in which it interacts with clients, it must consider whether its client proposition can be delivered in a friendly manner.

I would contest that, for as long as we continue to punt investment bonds with bid/offer spreads, initial charges, establishment charges, loyalty bonuses and back-end penalties, there is no prospect of customer service standards meeting modern expectations.

Until the bulk of the financial engineering that goes into concealing commission payments is consigned to history, the ability to deliver on service will be constrained. The first company that breaks ranks and begins to promote itself (and deliver) on a long-term value proposition will be the first company that will have any possibility of delivering on customer service.

There are many quality IFAs who consistently deliver as strong a level of service as the product providers will permit but their client relationships are consistently undermined by the poor performance of the manufacturers.

I am not sure how the Origo thing is performing these days but I remain to be convinced on providers&#39 commitment to delivering straight-through processing for the life of products. From a share of margin perspective, it is not really in the life industry&#39s long-term interest. As far as I can see, the life industry spends each working day helping to destroy IFA/client relationships the length and breadth of the land. Not good.

The other key point that should be observed is that, in order to provide quality service over the life of the contract, you must be in business to do just that. Without wishing to dismiss the abilities of any of the run-off companies, it seems probable that should a company be closed to new business and seeking to simply derive value from the existing book, standards are likely to slip a little. Who would bet on the survivors five, never mind 30, years from now?

Of course, for the life industry to develop any kind of serious interest in customer service, it must first develop a serious interest in its customers. By that, I do not mean working out by how much they can screw the punter in order to reward “their” IFAs. Life companies must actually begin to consider what the long-term needs of their end clients might be.

They must come to appreciate that an extra 1 per cent allocation on a bond is likely to be utterly irrelevant compared with the relevance of the underlying investment performance.

The most difficult issue as always with this industry is legacy business and the management thereof. Although this is a problem with an end, it must be acknowledged that the end is some way off.

Unhelpfully, of course, it is the oldest businesses that have the deepest service problems and the least impetus to improve. While this may be a big hurdle to a long-term improvement in across-the-board service levels and the resultant building of trust with the public, this does not mean that life companies should persist in the traditional manner.

The automotive industry did not retro-fit airbags into cars but it still took positive action to ensure that, where the technology was practically and economically available, safety was improved.

David Ferguson is a director of The Abacus

Recommended

Loan star raises more interest than pop star

No one was more confused at Imla&#39s annual dinner than the guest speaker, impressionist Alistair McGowan. When invited to make requests, the assembled mortgage luminaries asked for Michael Bolton – the one from Chester, that is.McGowan looked bemused, wondering whether he had just received some bizarre challenge. It would seem that, so far, the fame […]

Prudential Assurance – Capital Protected Growth Plan

Type: Capital-protected bond Aim: Growth linked to the performance of the FTSE 100 indexMinimum-maximum investment: £500-£1m, Isa/Pep transfers £7,000 Term: Six years Return: Option one &#45 Up to 100% growth in index subject to a maximum of 65% at end of term. Option two &#45 up to 85% growth at end of term Guarantee: Original […]

Treasury minds the gap

The Treasury is investigating ways to prevent consumer complaints falling through the gaps created by the FSA taking on mortgage and general insurance regulation.The gap was identified by the MCCB, which raised concerns that during the period before handing over to the FSA, consumer complaints may drop “through the cracks” with no body to deal […]

Abbey Nat opens multi-manager

Abbey National for Intermediaries this week launches its multi-manager operation, run by the same team behind its wealth management arm and manager of manager provider Inscape.The operation, which will sell through IFAs, its forthcoming wrap account and branch network, will offer a retail Oeic with five sub-funds – equity, growth, balanced, cautious and bond monthly […]

Simon Fletcher

Auto-enrolment: pay attention or pay the price

By Simon Fletcher

As a chief executive officer of a business in the financial services sector, I have been dealing with the introduction of auto-enrolment for our clients for some time, but I can also speak from an employer’s point of view, having to go through the process ourselves.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment