Standard Life group chief executive Sandy Crombie says the change in strategy widely credited to outgoing head of UK retail Trevor Matthews was in place before he joined and will be unaffected by his departure.
Matthews shocked the industry last week when he quit Standard to join Friends Provident as group chief executive.
He is credited by many with turning round the fortunes of Standard Life after he joined in 2004 as life and pensions chief executive.
Analysts see the departure of the Australian actuary as a big loss for Standard but Crombie says it will have no impact on Standard Life’s strategy.
He says: “When we conducted our strategic review in 2004, there were a lot of difficult decisions to make. Trevor did not arrive at Standard Life until all our strategic decisions had been made. We had all the fundamentals in place when he arrived and we still do. I wish him well and bear him no ill will but I assure you that Standard Life will not falter.”
Matthews has been put on gardening leave for six months before he can join Friends. Crombie says: “All the executives have a period of notice so that intellectual property does not walk away. Trevor will not be able to take any of Standard Life’s ideas to Friends.”
He says no decision has been made as to whether Matthews will be replaced or if his departure will be used to tweak the executive structure.
Crombie says: “We are pausing for thought at the moment. We do not have any search criteria in mind. We need first to decide on the roles we want for the future. We might want to make some structural changes.
“It might be a few months yet before we find someone or we might find we have got people internally who fit the roles.”
Last week, Standard revealed that UK life and pension sales increased by 15 per cent last year to £13.1bn from £11.4bn in 2006. However, individual pension sales fell by 18 per cent to £782m from £951m and one of Standard Life’s most successful products – its self-invested personal pension – failed to perform as well as expected in the second half of the year.
Individual Sipp sales grew by 24 per cent over the year to £4.5bn from £3.6bn in 2006 but there was a fall in fourth-quarter sales to £961m from £1.1bn. Group pension sales grew by 29 per cent to £2.5bn.
Crombie says the life office will be revising its persistency expectations and may be forced to pump in money to cover for lapse rates.
He says: “Persistency rates are better than the previous year but not as good as we had hoped. There appear to be a lot of people rotating between products but we are one of the few companies that are net winners.”
Standard says the fall in individual pension sales was due to heightened activity around A-Day in 2006 and the firm’s decision not to pay commission on new business. Crombie says: “We are asking people to look at the year as a whole and make allowances for the conditions in the second half of the year. We had record inflows in the first half.
“Advisers would have felt the cold wind in the second half. It is difficult for them to advise people where to put their money. In all the turbulent circumstances, we thought we had a really solid performance.”
Crombie says moving away from heavy front-end-loaded commission sales was a key part of Standard’s new strategy and says it remains to be seen whether advisers will embrace this over time.
“It is very much wait and see. We have led the way on moving away from up-front commission sales. If the retail distribution review encourages advisers to move away from this, we would be quite happy because we have already moved our business this way.”
Funds under administration on Standard’s wrap platform increased to £1.1bn by the end of 2007 from £0.2bn the previous year. There are 209 IFA firms and 8,100 customers using the platform.
Annuity sales increased by 13 per cent to £494m from £438m in 2006 and Standard says it will launch a variable annuity product later this year.
Crombie says the life office will continue playing to its strengths by developing its group pension, Sipp and offshore product lines as well as concentrating on its healthcare and wrap business.
Investor confidence in Standard was affected following its failed bid for Resolution. Crombie says: “It is very difficult to gauge how much confidence has been shaken by it.
“When we talk to investors, they rapidly understand why we found it an attractive deal at the right price but they also understand why we pulled out when we did. Only time will help to remove these residual concerns.”