2007
(28/06/2007) AXA's response to the Retail Distribution Review discussion paper
The FSA's Retail Distribution Review (RDR) discussion paper is very wide-ranging. As expected the main topics are the impact of incentives, outcomes for customers, and the sustainability of retail distribution. It also looks at the reputation of the industry, whether consumers get adequate access to products and the barriers that regulation may pose to more effective business models for both advice, distribution and manufacture.
Steve Folkard, Head of Pensions and savings at AXA, comments:
"There is a temptation to focus on the debate about remuneration structures because this is where many views polarize. However, the real debate is about how consumers become better engaged with the services they are purchasing. They need to understand what they are buying and how it will be paid for. This does not mean a choice between commission or fees, it means clear disclosure which does not overburden or confuse, but helps the customer understand what they are paying for, both now and in the future. The menu has not worked, and it is right to put that to bed. We shouldn’t rush to another compromise which does nothing to enhance the reputation of the industry.
AXA can take a unique and balanced position in this debate because we deliver services across all major forms of distribution and are continuing to innovate our approach. An engaged consumer, understanding the value of what they are purchasing is key to a sustainable industry based on trust and commitment to higher professional standards. We support the openness with which the debate has begun.
However, we think some ideas will need more scrutiny. In particular, the proposal to separate out a generic advice from 'primary' (or basic) advice needs careful thought. If generic advice is to be effective AXA strongly believes it needs to be directly coupled with the ability to steer and persuade consumers towards making a purchasing decision. It is difficult to see what value a '‘handoff' of a customer between different categories of advisor might achieve. Even though the industry may eventually benefit from more engaged consumers the cost of any proposed industry changes requires capital and there needs to be a clear commercial case for generic advice which is not yet proven.
This is a great opportunity to shape the attitude of consumers, both current and future for the better. To move towards business models which focus on better outcomes for consumers, deliver more long term value for their owners, and match the professionalism and competency of advice to the needs of different types of consumers. There is no single optimal business model to deliver this change. There are a number. The FSA have opened the door to innovation. It is now up to industry to define the support it needs form the regulator to achieve the best outcome for itself, and its customers."
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About AXA
AXA UK is a part of the AXA Group. AXA Group is a worldwide leader in Financial Protection. AXA's operations are diverse geographically, with major operations in Western Europe, North America and the Asia/Pacific area. For full year 2006, IFRS revenues amounted to €79 billion and IFRS underlying earnings amounted to €4,012 million.
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