View more on these topics

High street banks to benefit from FSA polarisation reforms

Independent market analyst Datamonitor&#39s new report, “UK Bancassurance and Tied Advice 2002”, finds that the removal of the distinction between independent and tied financial advice in the UK will increase the competitiveness of high street banks in the regulated product market.

Adopting multi-tied status will strengthen their distribution capabilities and allow partnering with leading product manufacturers in the life, pension and investment markets. Please

Datamonitor&#39s report examines the distribution of life assurance, pension and retail investment products via the direct salesforce, bancassurance and tied advice channels. In particular, it evaluates the impact of proposed changes to the polarisation of regulated financial services by the Financial Services Authority (FSA) and the introduction of multi-tied financial advisers.

In 2001, the bancassurance and tied advice channel represented 30.3%of the life and pensions market, equivalent to £2,149m Annual Premium Equivalent (APE). In the retail investment market, bancassurance and tied advice channel totalled £4,622m, or 16.1% of total gross sales.

Over the past five years, the bancassurance and tied advice channel has seen its overall market share of the life, pensions and retail investment markets decline. In life and pensions, it has fallen from 42.9% in 1997 to 30.3% in 2001, with retail investment market share declining from 27.4% to 16.1% in the same period.

Datamonitor forecasts of the market share of the bancassurance channel for life, pensions and retail investment sales will grow by 16% by 2006.

The growth will be driven by the ability of high street banks to offer an increased range of products due to the removal of financial advice polarisation in the UK. Datamonitor believes that the bancassurance channel will further increase its market share in future with the strategic partnerships formed between leading life and pension companies and high street banks. The success of the recent partnership between Legal & General and Barclays shows the potential of such new arrangements.

The real winners under the FSA proposals are the retail banks. Despite the tough time they are being subjected by the Treasury and Department of Trade and Industry over excessive profiteering at the expense of consumers, it will increase their propensity to offer a range of regulated products from leading providers and capitalise on cross-selling to their large customer bases.

Datamonitor financial services analyst Darren Oliver says: “The proposed depolarisation of the financial advice market offers retail banks the opportunity to penetrate the life, pensions and retail investment market, where they have been historically weak. The strategic partnership between Barclays and Legal & General has shown how product manufacturers can combine with distributors successfully. Multi-tied arrangements will allow these partnerships to develop and offer the consumer more choice.

“Nonetheless, the days of tied advice through direct salesforces and tied agents look to be numbered. It will be difficult for product distribution to be based on the offering of one single company as consumers demand greater product choice. Consumers also value the safety net of talking to an &#39expert&#39, meaning they are more likely to consult an adviser who has knowledge of more than one product.”

Recommended

Flexibility equals affordability for first-time buyers

Savills Private Finance claims that lender flexibility has made property more affordable for first-time buyers, but other brokers say low interest rates are a far more significant factor.Savills says that as a percentage of salary, mortgage repayments for first-time buyers are at a lower level than they were in 1992.It found that mortgage repayments on […]

Pink unveils see-through product deal

Pink Home Loans launches the first in a new range of crystal-clear mortgages today in a bid to promote transparency by highlighting the benefits of products that track Bank base rate.Mortgage Strategy can exclusively reveal that the packager has signed a deal with Mortgages PLC and Birmingham Midshires Solutions to offer both non-conforming lender&#39s entire […]

Fight rages over incorrect info

Network Mortgage Next and Mortgage 2000 are at loggerheads after inaccurate product information appeared on the sourcing system.Broker Mike Waite of Royston-based Mortgage Quest complained to Mortgage Next after sourcing a Mortgage Next exclusive buy-to-let product on the M2000 system.But the £299 administration fee the client signed up to was incorrect – the true fee […]

FSA will regulate mortgage packagers in 2004

The FSA is preparing to regulate mortgage packagers, sources close to the FSA told Mortgage Strategy last week.Packagers will be given &#39arranger/provider&#39 status, which flies in the face of the CML, IMLA and MCCB response to the Treasury. Peter Beaumont, sales and marketing director at Mortgages PLC, says: “This could have wide-ranging implications for the […]

Newsletter

News and expert analysis straight to your inbox

Sign up
Close

Why register with Mortgage Strategy?

Mortgage Strategy continues to be the market-leading B2B mortgage publication in the UK, and provides trusted, independent insight with the aim of helping, promoting and analysing the latest developments for mortgage professionals.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Mortgage Strategy Events
Be the first to hear about our industry leading conferences, awards, webinars and more.

Research and insight
Take part in and see the results of Mortgage Strategy's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now