Royal London chief executive Phil Loney has accused other providers of poor practice as they ‘sleep-walk’ customers into their non-advised drawdown products, as the provider prepares to launch its own service.
As first reported by New Model Adviser® last month the mutual insurer is gearing up to unveil its own non-advised drawdown service.
Today in the company’s interim results, Loney said Royal London’s own non-advised drawdown product will offer ‘better value’ than other providers which are repeating the same ‘poor practice’ which the industry saw with non-advised annuity sales.
‘We are concerned that some providers may be "sleep-walking" their existing non-advised pension customers into their own in-house drawdown offerings, repeating some of the poor practice seen in the historic annuity market,’ he said.
The Financial Conduct Authority (FCA) opened a thematic review into providers’ annuity sales last year over market practices.
‘Royal London intends to develop a better value for money drawdown offering and tools for those clients who insist on the non-advised route, but such competition will only be a viable solution if the FCA takes action to open this part of the market up to competition.’
For the six months to 30 June, Royal London’s operating profit was at £185 million, an increase of 34% from the same period last year. This was boosted by increased sales in its pension and Royal London Asset Management (RLAM) division.
New life and pensions business was up 45% for the insurer, at £6.1 billion.
This was helped by drawdown and individual pensions sales increasing by 64%, at £2.9 billion. Royal London said this was aided by the 1% exit fee cap introduced by the FCA earlier this year as individuals switch to products ‘which are good value for money’.
At its wrap platform Ascentric, assets under administration (AUM) only increased slightly, up 9% at £13.4 billion for the half year.
In March Royal London announced a £44 million hit over the replatforming of Ascentric. The firm did not disclose today when the upgrade will be completed or how much the upgrade is costing.
Net inflows at the wealth manager RLAM were £2.1 billion. Inflows were helped by some ‘large investment mandate wins’. Total AUM was at £106 billion, up 6% from the previous six months.