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RDR could hinder sales

If protection sales are included in the retail distribution review, it could hinder sales and increase the existing £2.3tn protection gap, warns Swiss Re Life and Health technical manager Ron Wheatcroft.

Wheatcroft, who is principal author of insurance report Term and Health Watch, says the terms of reference included in the RDR were written with investment in mind and protection should not be “lumped” in with it.

He says: “It would be dangerous to apply the methodology and thinking people are using for the RDR on investment products in the protection field. It needs to reflect the reality of the market.”

Wheatcroft is urging the financial sector to look at the impact some of the RDR conclusions may have on the protection business, particularly those firms who advise across different products, and seek clarification around what independent advice means.

He says: “There is this debate about the meaning of independent advice in regulatory terms. At the moment, there are three meanings – one in investment, one in protection and one in mortgages.

“If there is a new definition of advice, perhaps around a fee-based model, then if that is not a model we use in the protection market, we need to think through how that might be impacted.”

Wheatcroft fears that coining a definition on advice could be a step back.

He says: “Advice is advice and the quality of the adviser should be just as good. If we try to hang a definition on advice, we will end up back in the same debate 20 years ago about what advice means.”


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Guide: how to… communicate with your pension members

Effective communication of your pension scheme is a large part of getting auto-enrolment right. Delivering the same message to all employees is not necessarily the way to go. To assist you with the communication of your pension scheme, we have provided some key areas to think about, such as:

  • What to consider when segmenting your workforce
  • How to communicate to pension scheme members at the right time in their member lifecycle
  • What topics you should be discussing with your pension members
  • The new pension freedoms and the importance of communicating them


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