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Yorkshire and Clydesdale Banks scrap advice service

Yorkshire Bank branch-2013

Yorkshire and Clydesdale Banks are scrapping their branch-based advice service after Axa closed its UK bancassurance arm.

Money Marketing revealed yesterday that Axa’s bancassurance arm has closed following a strategic review of the business, resulting in the loss of approximately 450 jobs.

Until yesterday, Axa partnered with Yorkshire and Clydesdale Banks and the Co-op on investment advice, with Axa advisers providing branch advice. It also has a single-tie deal with the West Bromwich Building Society, where West Brom advisers recommend Axa products.

A Yorkshire and Clydesdale Banks spokesman says: “We have no immediate plans to offer advice in our branches but we will keep this under review.”

The Co-op says it has stopped offering advice in branches while it reviews its options.

A spokeswoman says: “Following Axa’s review of its bancassurance channel and subsequent decision to exit this market, the Co-op will cease to offer a financial planning service in its branches.

“The financial planning service has been provided by Axa for a number of years and following its decision to withdraw from this market we will now be considering alternative options.”

Co-op and Axa have had their bancassurance partnership in place since November 2011. The advice service was available through 335 Co-op branches with around 150 branch-based Axa advisers.

The West Brom is considering whether to continue offering financial advice or not.

A spokesman says: “Axa has made us aware of its decision to exit from the retail banking advisory market.  We are considering the implications of this and how best we can meet the financial planning needs of our customers going forward.”

Axa will continue to service existing Co-op, Yorkshire and Clydesdale Bank and West Brom customers.


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There are 21 comments at the moment, we would love to hear your opinion too.

  1. Derek Bradley ceo Panacea Adviser 16th April 2013 at 12:42 pm

    Our good friend Simon Mansell wrote the following prophetic mail to us last year:

    “I’m sure you will find the content of this research article below deeply disturbing, but it reinforces the majority of IFAs view, that the FSA has made once again, a massive blunder in implementing RDR and banning commission in such a short time scale.

    Again and again protest has been made but the FSA is deaf. It is of course never too late to stop this cliff edge disaster before it happens, but RDR going forward in its current format is simply to save face and not admit the regulator has erred.

    But as we have seen so many times in the past the FSA has an inability to grasp the reality of the so called “unintended consequences” and just proceeds without regard for any other opinions or in fact specific research. The KIS Ltd debacle is just one example of an organisation which did not take action when it could have prevented a disaster, it just lets it happen and blames everyone else, to the detriment of its credibility.

    Research by Deloitte has found that over five million clients may be left without advice as a result of the retail distribution review (RDR), as costs are made transparent and IFAs focus on higher-net-worth customers. Deloitte’s report said the regulatory changes and their impact on the advice market would leave five and a half million clients orphaned or without access to advice.

    It said:

    ‘These changes mean that there will be five and a half million disenfranchised customers who will either choose to cease using financial advisers or lack access to them. ‘These customers, who account for 11% of UK adults, will represent a significant post RDR advice gap.’

    The survey, which canvassed over 2,000 UK adults, showed that 46% of adults that bought savings and investment products over the last three years did so through financial advisers. However, the research showed 87% of those clients believed the advice process was free and in the future less than 2% of customers who have taken advice would be willing to pay a one off fee of £300 or more.

    According to the research 33% of adults with less than £50,000 in savings , and 32% of those with more than £50,000, indicated they would cease using advisers for all products if they were charged directly.

    Deloitte also found 27% of individuals were likely to opt out of advice and 32% said they would rather do their own planning, research and administration, as a result of the RDR. While the mass market stands as the most likely to exit with 2.4 million people expected to stop using an adviser, 2.5 million mass affluent customers were also predicted to exit the adviser market, alongside 600,000 affluent clients.

    The research showed that of these customers, up to 3.4 million use bank advisers and up to 2.1 million use IFAs”.

    So where do the now disenfranchised customers of the banks go?

    It may be a good time for Unbiased to look at creating some alliances with these firms as out of adversity comes opportunity.

  2. I was going to describe the RDR as badly thought out but this assumes that any thought was used in coming up with the best business prevention package since the establishment of VAT.

    Sure, this is old hat and there will be many weary of reading such plaintive prose however we must not let the message become lost.

    The RDR has disenfranchised millions of consumers. In particular the very consumers who need advice the most.

    If the FCA is serious about putting distance betwene itself and its failed predecessor then it needs a rethink PDQ.

  3. Stephen Rowland 16th April 2013 at 12:56 pm

    Potentially more institutions hitting the dust!

    Well done FSA / HECTOR SANTS!

    How much longer before ‘Middle England’ obliterated regarding Financial Advice?

    As generally the Industry has said said all along (except the wealthy IFA Company’s – nobody in charge in their ivory towers either care or give a fig for Financial Advisers / Middle England clients. When middle england clients realise what’s going on regarding RDR they will rue the day of banning the commission option – at least they did SOMETHING for Savings / Protection- – not like now – too afraid to enquire because of the perceived cost!

  4. In what possible sense was the RDR and banning of commission introduced in a short timeframe?

  5. Ironically, having split our consumer base in to Clients, Customers, ex customers and non customers and letting the people we dealt with decide what they wanted to be back in 2009, we are now finding that RDR means some are re-engaging with us by choice and becoming retainer/ongoing fee paying Clients.
    I still think RDR and more particularly RDIP is a complete mess and will be bad for the consumer for about 5 years (as the FSAs own reports showed) and that long term, RDR may be worthwhile for consumer and adviser alike, but my fear remains that with the banks pulling out of the “advice” market, the mess could be fatal for all concerned.

  6. RDR could have been done in one sentence
    Maximum commission 3% + 0.50% end of
    Anyone found to exceed this fined end of
    Makes you think that they had another agenda which is now coming to pass end of

  7. Where will the money come from, to fund the FS quangos?
    There will not be enough institutions left to fund the lavish lifestyle to which the regulators have become accustomed.
    This whole thing is turning into a complete fiasco.
    Why is there no statement from the FCA, explaining to consumers, why they can no longer access advice?
    Or is this a cunning plan to reduce consumer detriment, which costs more than the actual detriment?
    No advice – no detriment – no savings & Investment.

  8. anon 1.32pm

    Well said !!!!

  9. The UK consumer is used to paying the “Price” for goods and services. When engaging an Accountant or Solicitor they are paying for the advice and services offered, with Financial “advice” the grater public take advice to find the best product that is suitable for them and they expect the Adviser to be remunerated accordingly as per 99% of the transactions that have been made since the advent of money as part if the product.
    It will take to long to change this basic UK consumer habit and I expect that RDR based advice will become the reserve of HNWC only, but because of the loss of the mass market middle sector may cause the loss providers, competition driving up regulation fees, becoming an ever decreasing industry.
    In 5 years time when the next regulator is introduced following an inquiry as to what happened to the UK retail financial services industry there may be change but don’t bet your business on it!

  10. Surely RDR is the IFA’s friend as more tied agents working for big Banks and Building Societies closing down is only good news.

    Instead of whingeing maybe we should be looking at ways of attracting clients – particularly now the large organisations are getting out of advice for various reasons including RDR!

    And as for the constant chorus of whingeing to do with commission this is not necessarily a bad thing for IFA’s it is a bad thing for consumers particularly if product providers carry on their stance on legacy products. I wish that the regulator would at least enforce RDR evenly across the whole of the industry and stop product providers banning restructuring of charges on legacy policies as most providers are blatantly profiteering at the consumers detriment.

    What happened to treat clients fairly!

  11. @RDR 1.55
    Do you think you will earn enough to pay for the cost of regulation?

  12. @ Anon 1.32. Could not agree more with one addition – client agreement signed to say they agree with the commission payable. The whole thing has cost advisers millions which has to be passed on to clients. I dont think there will be one adviser anyawhere who has been able to reduce the amount the new fee will be to clients and make it sustainable. My own AC has increased to a max of 4.5%implementation fee on first £200000 (with a rock bottom minimum of £750 for lump sums or regular). My on- going charge for those who want it ranges from 0.75% to 1.25% depending on the service the client wants and whatever ongoing is charged, is reduced from the implementation fee. I dont like to increase fees but have made it clear that this is wholly and exclusively down to the RDR. Some take it some dont, that is out of my control and those that dont go elsewhere. Not a nice situation to be in having lost my 2nd ever client (from my entry to the business in 1989) but I have had to be brutal about this. I will know more in about 18 months after I have been round every client. Who knows I may be looking for job elsewhere then as it turns out that not enough are willing to stay with me. I have not taken on a new client in 12 years as I made a reasonable living by constantly servicing my existing client bank – Maybe I will have to start and start soon. Just my thoughts on it.

  13. Lindsay Lockett 16th April 2013 at 2:36 pm

    I am I the only one waiting for Barclays to pull out of all markets that require the oversight of their head of compliance, so they can sack the one and only Hector Sants.

  14. @ Anon – How would capping commission stop poor advice!?!? Its still commission, its still dependant upon a product sale! And if something is dependant upon a product sale, how often is the customer going to be recommended a product, regardless of the suitability???

    Commission has been the main driver behind nearly all forms of poor advice in this industry……end of.

  15. Three months into RDR and my experience so far is that clients are actually paying for financial planning reports e.g. an assessment of their finances without a commitment to a product. Before RDR we were doing this work free of charge and now were actually able to charge for it!

    I am still charging for implementation of products e.g. 3% initial and a 0.5% ongoing service fee but the clients are now paying for an unbiased report that they can either accept or leave. The fact is they are agreeing to pay £500 for an unbiased opinion. In effect that means we get paid for recommending deposit national savings and other products that we wouldn’t normally got paid on.

    So if you asked me – IFA’s are well set to make a reasonable living thanks to RDR.

    Do I care about the millions of people that can’t afford my services not really in any way they will always paying charges it was just wrapped up within products.

    Do I care about banks and building societies getting out of advice – let me think about that for one nano second – NO!

  16. @ Matty

    Silly little thing I know but you got any proof of that ?

    I ask simply because the FSA (remember them?) couldn’t find any !

  17. It seems that Matty & RDR are the only ones with some vision. Again too many are concerned with ‘the public’ instead of concentrating on their own business. If you are so concerned then won’t it be easier for you to help these poor disenfranchised people?

    Indeed with the departure of all these ‘advice’ outlets there is the huge advantage to the GBP (Great British Public) not getting ripped off, and suffering the abysmally poor advice that has been so prevalent from these outlets. They now realise that they can’t survive without commission and the ability to hide what they take on page 26 of the KFD.

    It is no coincidence that the majority of the banks entered the ‘advice’ arena AFTER the maximum commission agreement was dismantled.

    If this is down to the RDR then I for one are beginning to be very thankful for the disruption it has caused. It really is beginning to seem that it was indeed all for the good.

  18. I cant’ see the issue here – the great mass of people in the UK have far more debt than investments – financial advice for them is simple and free – focus on paying off debt.

    Beyond that most will see compulsory saving through auto enrolment/NEST to ensure they don’t have to eat dog food in retirement.

    For the relatively small number that find themselves in the advice gap – (have savings but less than £100,000 – the level at which paying a fee for advice becomes worthwhile) – there are an increasing number of websites they can use – from Hargreaves Lansdown, MoneyAdvice and the new entrants such as Nutmeg – all offer the ability to access lots of useful information and execute a purchase on reasonably priced terms.

    Yes they need protection and life cover – good news is that they can still buy that through commission based advisers.

    Its all good news for good quality IFAs that can now deliver a valued service to the right type of client and make a reasonable profit for their efforts.

  19. Closure of bank channels is the outcome the FSA wanted. They do not want mass market clients investing in equities, full stop. They decided long ago that the mass market must only put their money in bank deposits. Much easier to regulate for them and whole lot cleaner all round. Anyone advising a mass market client to invest in equities must be mis-selling. Not open for further discussion. Yes well, there is a massive and growing hole in the public purse when it comes to funding retirement. Best not think about all that. Messy business, move along now!

  20. So far the banks pulling out has not resulted in many more enquiries for Independent Advice from what I have experienced.

    However when markets start heading south I expect this to change rapidly – as they will have nowhere to turn.

    What I have noticed though is more people asking about the ‘cost’ of the advice – I guess as a result of RDR but probably due to more from our press that still demonises us.

    How our industry needs to change further as it is not ‘cost’ that should be the consideration – but ‘value for money’.

  21. Harry, you’re dribbling again. Chin up old chap and back to bed with you.

    The reason that the RDR is creating havoc and is not the friend of anybody with a functioning brain is that it is destroying the infrastructure of advice outlets which took so many decades to build up.

    As a result, consumers will not know where to go and if you believe they’ll knock on your door or even have the nous to go online then you are even more Alzheimic than the evidence suggests.

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