Skandia quits ABI over advice row

Tuesday, 04 November 2008 07:06

Skandia UK has left the Association of British Insurers (ABI) after a row with the organisation about advice in life assurance sales.

The company is part of the Skandia Group, itself owned by Old Mutual, and has now aligned itself with the Association of Independent Financial Advisers (AIFA) instead.

Skandia claims it has little in common with the "traditional with-profit providers or bancassurers" the ABI represents and disagrees with a proposal to introduce 'assisted purchase' as a distribution channel.

The disagreement follows the Financial Service Authority's retail distribution review, which analysed the way financial products are sold.

The ABI responded by suggesting a third distribution method, 'assisted purchase', which allows consumers to consult experts on the appropriateness of products but do not receive formal advice.

According to Skandia, the proposal would be "blurring the clear distinction between sales and advice".

Chief development officer, Peter Mann, said: "Skandia's place in the future of financial solutions is very different to the old image of life and pensions companies and I wouldn't have joined if I thought it was part of the old guard.

"Of course it's important to have product wrappers but I believe it's much more important to focus on customer outcomes. When it comes to lobbying on key issues we find bodies such AIFA more closely aligned to our strategy going forward."

Stephen Haddrill, the ABI's director general, said: "On the retail distribution review, we make no apologies for standing up for consumers.

"Our members have consistently been in favour of increased professionalism and have advocated reform to eliminate commission bias and increase consumer trust in financial advice."

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