Is this what the argument is all about – £189m a year in
excessive commission (ABI statement) or 25p a week for the 10 million
Is that what Sandler is all about? Is that why we need to reverse
polarisation? It is about time the control freaks got real.
If my father had life insurance on my mother when I was four years of
age, he would not have had to work round the clock. He was a master
tailor, he died broke but it did not make him a bad man or a bad
tradesman, any more than one inane comment in your last edition makes
“small intermediaries who are undercapitalised” bad financial
Mary and her seven-year-old daughter did not bother about commission
when her husband died servicing an aeroplane. She was able to buy
her own home and the two of them live in their own world because of a
small family income benefit policy and whole-life insurance.
Gwen wished she had taken out a family income benefit policy when her
41-year-old lorry-driver husband had a heart attack and left her with
sevenand nine-year-old daughters, even though the life insurance
salesman had succeeded in setting up a low-cost endowment that paid
her mortgage off. She was not worried about commission and the ABI's
25p a week.
Chancellor Gordon Brown takes almost 17 times that £189m out of
charities in back-door taxation every year. He takes 26 times that
from pension funds every year. Where are the headlines? Where is the
Sandler committee to investigate that?
Polarisation is understood by the public but does not suit the banks.
Perhaps they want their own products and their own huge margins to
make up for their other inadequacies. Ten years ago on PIMS, we were
told by an arrogant banking economist that they could do the life
insurance job at two-thirds the price. Where are they and why haven't
Perhaps it doesn't suit the fund managers, either, with their
short-termism, high-cost advertising campaigns and lack of
responsibility for their investors' decisions.
It is the life insurance industry that provides the banks with their
capital through share ownership and keeps the supermarkets afloat,
along with entrepreneurs, whose external funding appears to be the
life insurance and pension funds that are ridiculed so readily.
You would do well to question Mr Davies at the FSA on his motives,
and the ABI and Mr Sandler on their arithmetic, if all it costs is
£189m a year in what they call expensive products for people
like me to sort out a widow's trust when her husband dies or to spend
hours sorting out somebody's will when they are on their deathbed or
to ensure someone goes on three cruises a year by providing them with
enough income in retirement to help them do that or to put
£200,000 into a business when one of the senior partners dies
and the banks freeze its bank accounts.
Don't talk to us about 25p a week or the dismantling of polarisation.
The dubious extravagances of bureaucrats and their sub-contracted
firms in the so-called pension misselling scandal and the unnecessary
letters to 13 million endowment holders are their testimony to the
fact that many, if not most, of those review bodies could be better
employed to ensure that the railways are run properly, the health
service is properly administered, foot and mouth was adequately dealt
with and BSE is dealt with efficiently.
Enough of smoke and mirrors. Leave us alone. A period of
consolidation is what the life insurance and pension industry needs
so that we can continue doing our good work despite efforts to stop
Terence O'Halloran Chartered insurance practitioner,