“The Chinese use two brush strokes to write the word ‘crisis’. One brush stroke stands for danger; the other for opportunity.”
John F Kennedy’s take on dealing with a crisis is probably familiar to ABI director-general Huw Evans. A former Number 10 troubleshooter under Tony Blair, Evans has forged a career through his ability to manage potentially toxic situations.
“Some of what I did at Downing Street was air traffic control on major government policies,” he explains. “So my job was to make sure all the ducks were in a row when making policy announcements.
“I was also involved in troubleshooting when things went wrong in specific departments. So there was a big saga with sex offenders in schools and I had to help deal with that. I also worked on counter terrorism.”
Evans dismisses any comparisons with Malcolm Tucker, the anti-hero of acclaimed mocu-drama ‘The Thick of It’.
“Politics is far more serious than that. When I was in Number 10 on the day of the 7/7 attacks or in August 2006 during the transatlantic airliner threat, in those sorts of situations everyone is extremely serious and committed.
“Most of the time politics is not extreme. It is very hard work and very intense, and the ministers who are making decisions are under huge amounts of pressure. Most people behave well most of the time and that is why government works.”
Before applying his fire-fighting experience to the insurance sector, Evans spent two years working in group strategy at RBS from 2006 to 2008 – a case of out of the frying pan, into the fire.
He says: “It was obviously a very turbulent time while I was at RBS. I actually worked on the ABN Amro acquisition and then on the rights issue that followed it.
“I wasn’t a decision maker; I was a highly paid servant of the people making the decisions. But it gave me an insight into behavioural issues and how these large transactions work, which has helped since.”
While perhaps paling into insignificance compared to coordinating responses to terrorist attacks, the insurance sector has faced a crisis of its own in recent years. A lethal combination of quantitative easing, consumer apathy and provider failings led to a barrage of negative publicity for the sector – and annuities in particular – in the build up to the March 2014 Budget. But was this criticism fair?
“It is difficult to get the message across on annuity rates because the decision by the Bank of England and the Government to introduce QE was right from a macroeconomic perspective,” Evans says. “One of the obvious consequences of that decision was to make an annuity a much poorer value product for somebody who was approaching retirement. But some of the criticism the industry then came in for was unfair because it was a victim of the economic situation.
“Some of it around the difficulties in shopping around was justified and that is why the ABI produced its retirement code. It did improve the level of shopping around but it didn’t drive up switching rates.
“That is one of the reasons the Government decided to go for a far more radical option. The code had demonstrated there weren’t any easy fixes because, even when you had people shopping around and seeing they could get a better rate, they just weren’t moving.
“My frustration at times with the debate is that some of the attacks on the industry have pretended that inertia is only an issue in the insurance industry and that it is all the providers’ fault. There was more providers could have done if the Government hadn’t chosen to shift the parameters so dramatically but it is not fair to say either that the level of rates were driven by insurers.”
Evans says the “real test” of pension freedoms is yet to come and wants to see the Government ramp-up promotion of retirement guidance service Pension Wise.
And while at pains to stress the industry’s support for the reform programme as a whole, pension scams remain a real cause for concern.
“Everyone is concerned about fraud because there is obviously a much bigger opportunity for scammers than there was under the old system,” he says.
“The law could be strengthened further to allow providers to reject – without any equivocation or comeback – a transfer request which they believe to be fraudulent. We need absolute legal clarity that, if in doubt, providers can reject a transfer.”
Insurers have, predictably, been forced onto the back foot over accusations of “rip off” drawdown charges, with consumer campaigners calling on the Government to create a Nest-style provider to drive down prices in the market. Evans, equally predictably, gives the idea short shrift.
“The issue about what becomes the new default in the new world is something we should all be discussing but jumping to the conclusion that some sort of Nest II is the answer is very premature.
“The market is only just starting to develop and we should see what it can deliver before looking at Government interventions that create quangos that could distort the market.
“We have one of the most competitive and effective long-term savings markets in the world and so it seems odd to suggest there is the need for some sort of state intervention.”
Encouraging firms to develop affordable advice models, however, does require stimulus from the regulator, Evans argues.
“If we want to make the freedom and choice reforms work in the long-term, we have to do something about that space because there are a lot of people with pots worth more than £30,000 and in many ways they are the people the reforms are aimed at. What I would like to see is the market develop to solve that problem.
“But we live in an incredibly litigious era and the consequences of someone going in first and there being a retrospective regulatory framework would be a heyday for claims management companies.”
Ahead of the July Budget, the ABI is also making the case for fundamental reforms to pensions tax relief.
“We agree the distribution is too skewed towards higher earners but the way to deal with that isn’t to salami slice it to pay for things like tuition fees or IHT changes,” he says. “You need to look sensibly at a single rate and the level it should be set at.
“That must be equitable across public and private sectors, because the way DB multipliers work for people who are primarily in the public sector are not equitable with the private sector.”
What’s the best bit of advice you’ve received in your career?
Always treat the people you deal with with respect. You never know when your paths may cross again.
What has had the most significant impact on financial advice in the past year?
The implementation of the freedom and choice reforms illustrating the challenges around access to and the supply of advice.
What keeps you awake at night?
Small children having nightmares. Not much else.
If I were in charge of the FCA for a day I would…
Agree the ABI Action Plan and sort out the implementation problems with freedom and choice.
Any advice for new advisers?
Work with providers to ensure that together we are seen as part of the solution, not the problem.
2015-present: Director general, Association of British Insurers
2013-2015: Deputy director general and director of policy, Association of British Insurers
2008-2013: Operations director, Association of British Insurers
2006-2008: Group strategy team senior manager, Royal Bank of Scotland
2005-2006: Special adviser to prime minister Tony Blair
2001-2004: Special adviser to home secretary David Blunkett
1996-2001: Labour Party press officer/Welsh communications director