Drawdown and individual pension sales at Royal London rose by more than 60 per cent in the first half of 2017, but the provider has hit out at the non-advised market for failing to protect customers.
In its results this morning, Royal London said that it had seen a particular boost to individual pensions and drawdown sales from its drawdown governance service for advisers, which helps calculate sustainable income levels and produces client reports.
However, Royal London chief executive Phil Loney slammed providers who allowed non-advised customers to “sleepwalk” into their in-house offerings.
Data from the Association of British Insurers shows little shopping around when it comes to non-advised drawdown, with 94 per cent of sales made to existing customers, and recent FCA data also shows the proportion of drawdown bought without advice has risen from 5 per cent before the freedoms to 30 per cent today.
Loney says: “We think this is concerning as the best outcome for customers when choosing an income drawdown strategy generally occurs when they take financial advice, as the decisions are complex and can form a significant part of an individual’s retirement income. We are pleased that the FCA is looking at this area more closely, and our view is that they should do more to encourage individuals to take impartial financial advice when contemplating income drawdown.
“We are also concerned that some providers may be “sleepwalking” their existing non-advised pension customers into their own in-house drawdown offerings, repeating some of the poor practice seen in the historic annuity market.”
While Royal London currently does not offer non-advised clients a drawdown service, Loney said the provider was still planning to expand the help it gives those buying drawdown products without advice.
Loney says: “Royal London intends to develop a better value for money drawdown offering and tools for those clients who insist on the non-advised route, but such competition will only be a viable solution if the FCA takes action to open this part of the market up to competition.”