By Kira Nickerson Legal & General will sell its stakeholder pensions through Barclays Bank branches,...
By Kira Nickerson
Legal & General will sell its stakeholder pensions through Barclays Bank branches, in light of the FSA's plans to relax the rules on polarisation and introduce multi-ties.
Subject to regulatory approval, Barclays intends to offer Legal & General branded life, pension and investment products throughout its UK distribution network.
Barclays Life, Barclays Funds and b2 will not be recruiting new customers from the beginning of the second half of 2001 and the unit trust business of Barclays will be transferred to Legal & General. Existing business will be retained and managed as a closed book.
Existing customers of Barclays' funds and life business will still be able to make contributions to their pensions and to their funds, which will continue to be actively managed.
This is expected to result in the loss of 750 jobs at Barclays in London and the South East during 2001 and 2002.
Within 18 months the administration of the existing Barclays funds book will be transferred to Legal & General, subject to both FSA and trustee approval.
Subject to the changes to polarisation, the two groups will also work together to develop a fund supermarket. This will enable each group to offer, through direct offer advertisement in which no financial advice is given, a choice of a range of Isas to its respective customer bases, based on Legal & General administration systems.
From 6 April, Barclays will offer the life office's stakeholder pension product, and in the second half of the year the bank intends to gain approval from the FSA to offer Legal & General's full product range.
The bank has already been selected by 6,000 companies to provide their employees with a stakeholder pension.
David Prosser, Legal & General group chief executive, said: "By substantially increasing our business volumes, we will strengthen Legal & General's position in the stakeholder pension world and reinforce our ability to provide profitable market leading products.
"I believe the Barclays and Legal & General arrangement will become the bancassurance model of the future.
"By putting the Legal & General brand and product range inside Barclays' physical and virtual network, the goal is to at least double Barclays' sales of long term savings, protection and investment products within four years. I am confident that goal will be achieved."
The two groups expect that the alliance will push Barclays' sales to more than £100m by 2004, and to more than double fund sales to £2bn per annum. Legal & General is to pay Barclays a distribution commission and the bank will become the life office's largest distributor.
Prosser said the alliance is anticipated to increase Legal & General's UK equivalent premium income by more than 25% in the first full year of operation.
Barclays is to retain its existing distribution channel and its regulated sales forces, while Legal & General's tied sales forces will not be involved in the Barclays arrangement.
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