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Submission implausible

Some would say the recent leak of the alleged Association of British Insurers submission to the retail regulatory review revealing that it wants to strip down contracts down to remove product advice does not go far enough.

Let us get down to the bare essentials. After all, we do not all want the colour brochures or duplicate statements or access to an impotent call centre. Let us have a menu of services where we can strip out what we do not want. That may well include the costs of sales management and even the rep on the ground.

If it is a bulk standard product or wrapper, why do we need all these masses of people in marketing? Why don’t insurers have a set of travelling teams that can move between them as needs dictate?

Life insurance providers remain inefficient and unable to face up to reality. Many of the current breed have multiple head offices and their communication effectiveness is pathetic.

I have said before we need new ideas, not repackaged ones. The return of the direct salesforce with less compliance is something we cannot allow to happen. We need to get more professional, not less.

I must admit this was always likely to happen and, for some of the life companies, the retail regulatory review will be their swansong.

To suggest even by implication that advice is the main cost in any transaction is ridiculous. If we go to factory gate pricing, then I want just that. We should be able to remove non-essential parts.

But wait. The ABI wants a new channel. Yes, it is the return of the direct salesforce. I suppose this channel may be opting out of treating customers fairly, too?

If this sees the light of day, then I despair. The ABI’s answer to a loss of control in distribution is to create a new channel that it can dominate and that has lighter-touch regulation.

This would put an end to treating customers fairly. Surely, this is not what is wanted by the regulators and far less the consumers? I hope the FSA does not capitulate in any way.

The ABI’s submission has made it clear that it still hankers after the bad old days. Maybe now is the time to create some blue water between intermediaries and providers. After all, they may market in a way that is unacceptable to anyone other than them.

If my comments causes a rethink, that’s fine. If the ABI ploughs on regardless, then I see the end of the road for it. If it does not accept my warnings, try the speech by Clive Briault earlier this year. There is no doubt that the regulators want a more educated adviser. This proposal would deliver the opposite.

This may seem a bit of a rant but whatever. We need to ensure that we do not get a market that will be far from consumer-centric. Our future as professionals depends on robust compliance and no compromise. We all need to talk about added value and recognise that the consumer is not as stupid as some would have us believe.

One last point. Today saw history made when my teenage son came running downstairs and asked that I turn down the volume on my stereo. This means one of two things – he is older than he appears or the old guy still rocks. Which is more than I can say about the ABI following its blatant attempt to turn back the clock. It doesn’t rock, it rolls back.


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