Commenting on discussion of commission payments and after-sales service at the Treasury Select Committee hearing today, Mary Francis, Director General of the ABI (Association of British Insurers), said:

"There are no easy answers for policy-makers.  People considering buying a pension or any other long term saving scheme need good advice, and that has to be paid for.  The only alternative to paying advisers through commissions from financial services companies is for customers to pay up-front fees.  Those are costly, and all the evidence shows that most customers prefer the commission route. 

If the Government and the regulator were to insist on payment through fees alone, fewer people might seek advice and fewer people might save.  That would be a backward step. 

We believe that the right approach is more transparency about the commissions that financial advisers receive.  That is what Ron Sandler recommended and what the FSA is implementing."

She also pointed that the life industry has recently established a quality mark scheme which sets rigorous standards for after-sales service.

"The Raising Standards scheme is providing concrete benefits for customers, including clear annual statements which set out how individual policies are doing."

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Notes

Notes for Editors

1.            Enquiries to:       

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2.            The ABI is the trade association for Britain’s insurance industry. Its more than 400 member companies provide over 97% of the insurance business in the UK. It represents insurance companies to the Government, and to the regulatory and other agencies, and is an influential voice on public policy and financial services issues. ABI member companies hold more than a fifth of all investments traded on the London Stock Exchange, on behalf of millions of pensioners and savers.

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