Skandia leaves insurers group
Updated on 03 November 2008
Skandia has announced it is leaving the Association of British Insurers after a disagreement over the way financial products are sold.
The group, which distributes its own and other providers' investment products through independent financial advisers, said it was different from "old style life and pension companies" and had "little alignment of interests" with the broader ABI membership. It is instead reinforcing its support for the Association of Independent Financial Advisers.
The disagreement has its roots in the Financial Services Authority's retail distribution review, which looked at the way financial products were sold.
In its response to the review the ABI proposed introducing a third way of selling products, known as assisted purchase, under which consumers are not given formal financial advice, but they are able to consult experts about the appropriateness of products for their needs.
But Skandia claimed the proposal blurred the distinction between sales and advice and would confuse consumers, adding that the ABI's own research showed that 66% of people who had bought a product during an assisted purchase trial thought they had received advice.
Instead it strongly supported the FSA's proposal for there to be a clear distinction between advice provided by a professional adviser working on the client's behalf, and sales made by a representative of the product provider.
Nick Poyntz-Wright, chief executive of Skandia UK, said: "For some time now we have viewed ourselves as different from more traditional life insurers and have felt a lack of alignment with the broader membership of the ABI.
"We offer our investment solutions only through financial advisers because we believe passionately in the importance of quality advice to guide and support customers' financial decisions. Unfortunately fewer and fewer of our peers amongst the ABI membership share our focus on the advice sector."
He added that the ABI continued to do good work in improving corporate governance and lobbying for the fair tax treatment of UK savers, but the time had come for the group to "step away".
The ABI said it did not recognise Skandia's description of its members. Stephen Haddrill, director general of the ABI, said: "ABI membership is made up of a wide range of excellent financial services, asset management, advice and protection companies. On the Retail Distribution Review, we make no apologies for standing up for consumers."
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