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Resolution issues

As it appears more likely that Pearl and Resolution will merge to form a giant financial services player comprised mostly, if not entirely, of series of closed books many questions come to mind.

Advisers will want to know what now for Friends Provident and Standard. Both businesses believe they will be better off with partners who can provide access to capital. Both may be targets. The “open” life sector may be about to see more consolidation.

Whether this is a bad thing or not will depend on who joins with who and on what basis.

But with Standard and Friends out of the frame for a deal with Resolution, we now have the prospect of Pearl and Resolution coming together while Royal London can take parts of the business too, bolstering its position as the biggest “life office” mutual. From a City point of view, both Pearl and Resolution have witnessed a dramatic turn-round, one from its AMP days and before, the other when it languished as Britannic.

But for all the talk of the big personalities involved in the two businesses, the most important issue for advisers and savers is what happens to investment returns, are all promises to policyholders being honoured and is this being communicated effectively to investors or advisers? How will a merger improve their lot? This week, John Joseph writes to us suggesting we have not been robust enough in questioning what such deals mean for policyholders. In the next few weeks, we will endeavour to find out.

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