The ABI's plans for raising industry standards contain several intermediary-friendly elements but as...
The ABI's plans for raising industry standards contain several intermediary-friendly elements but as yet these, along with the rest of the project, remains firmly in the land of principle not practice.
The central proposal put forward by the Savings And Long Term Risk (SALTR) project is to make the industry more consumer friendly. Included within this is the idea of standardising key feature documents and sending out an annual valuation report for clients, again to be laid out in a set format. This is something that lacks controversy in theory but it remains to be seen if this will actually comes to pass.
As ever the small matter of how much SALTR is going to cost remains to be solved and the ABI is being either vague or tight-lipped on the matter.
There will be two basic costs involved for product providers should SALTR go ahead. The first involves paying to establish and maintain a team to accredit those life companies which prove to be consumer friendly enough. Earlier this year Investment Week revealed the ABI's initial estimate was that it would have to raise £11.4m over three years to get the accreditation board up and running.
It also reckoned the annual operating costs of the board would come in at £1.8m while it would need to spend £1m each year to market the quality mark concept.
The second cost, is one which the ABI has told Investment Week would probably be more expensive to product providers than the accreditation board. That is the cost to companies of standardising their literature.
In fairness to the ABI its initial estimates of how expensive SALTR is going to be might well have been scaled back. Still the fact remains life offices are going to have to put an awful lot of money where their mouths are if the project is going to work.
SALTR is also on a pretty tight timetable. By the summer the ABI expects a working version of its accreditation system and standards to be up and running and it wants to have the first accreditations in place from the middle of 2001. That doesn't leave SALTR long to persuade life offices to sign up and with large sums of money involved the principle of "no taxation without representation" might well raise its head.
None of this is going to affect intermediaries directly as they are not stumping up money for the project. If SALTR does get into troubles the biggest negative would be that the principle of standardisation disappears. Should disaster strike and one half of the project has to be jettisoned far better the accreditation board never makes an appearance. No one wants to see a partial SALTR where only those who can afford it get accreditation.
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