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Putting the boot in to industry&#39s reputation

Recent publicity surrounding Manchester United captain Roy Keane reminded me that once an individual has a reputation, it is inevitable that they will live up to their billing.

The danger of using soundbites when talking to a personal finance journalist in the national press is that, at some point, you will be caught out by a simple comparison of what is a complex problem.

Commenting on a company&#39s withdrawal from the market is one such situation where the easy thing is to make a comparison and the difficult part is to pick the ideal comparison.

Recently, a couple of IFAs, who are in the press more often than Keane, have been suggesting that Royal & Sun Alliance is another Equitable Life. Nothing could be further from the truth. To make my reasons clear, let us consider if R&SA is similar to Equitable Life.

R&SA recognised its guaranteed pension liabilities while Equitable chose to ignore them. R&SA, in closing down to new life and pension business, has ensured that IFAs are fully informed by using its consultants in a low-key yet effective way to communicate to them before, during and after its recent announcements. Equitable&#39s efforts at communication have been less than impressive.

R&SA has a parent company committed to maintaining its solvency, unlike Equitable which had no such underpin.

Now I realise that the words of the mighty analyst Ned Cazalet may be aimed at me but the essential point is that R&SA acted before the problem got worse, not after. Equitable Life acted when it had no choice. This was not a strategic decision but a decision forced on Equitable by circumstances via the House of Lords.

But making such sweeping comments is also irresponsible, given the public&#39s distrust in all things financial. The savings gap will probably continue to grow as more negative comment is made. Instead of criticism, there is just as good a story in that R&SA took pre-emptive action.

As I stated in my last column, we need to address the image problem that insurance and investment have with the general public. This does not mean that we ignore activities or actions which lead us all into collective disrepute.

Under the pension review, the regulator decided to compensate using a “snapshot”. This had its advantages in concluding the review but when the inevitable bear market arrived after a significant correction, the benefits of being compensated in a personal pension paled significantly. This does not mean that journalists should be calling for the review to be reopened, as they originally called for instant compensation.

Where the individual was put back into their original scheme, they may now be facing a wind-up where their transfer value is much less than the payment made to repatriate them. As a matter of urgency, we need to make the point that IFAs did not select the method of compensation and that those seeking a second bite should direct their ire at the FSA.

Keane got the red card primarily for believing in his own invincibility. In a similar vein, commenting in a way that allows the personal finance press to aim and fire at will serves no one, be they a provider or salesperson, nor does it do anything to enhance the public&#39s confidence in insurance.

We need to ensure that everyone realises that quality and not quantity of comment in the press is what we need to aim. But, for now, I would just like to hold up two red cards in the direction of the West Country.

Robert Reid is principal of Syndaxi Financial Planning.

He can be contacted via email c/o the editor at


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