Bancassurers will provide a home to "orphaned" IFA customers in the wake of changes to sales and advice categories proposed in the Retail Distribution Review (RDR), HBOS Financial Services says.
Speaking at the Tax Incentivised Savings Association (TISA) seminar in London, Paul Shelley, head of product development at HBOS, says the RDR will be a good thing for the bancassurance sector which, in turn, will give consumers who no longer suit IFA advice a place to go.
"Some customers will not be suited to IFA advice anymore; therefore some bancassurers will pick up the role of giving advice to these people," he said.
Shelley adds the RDR, a consultation on which ends in June, will "clean up" the bancassurance industry, helping to improve its reputation.
Bancassurance, borne out of mergers between insurers and banks which then offered insurance products, retains a controversial role in the financial industry.
But Shelley says the credit crunch has strengthened the sector's relationships with customers, adding companies are seeing business levels rise.
He says bancassurers had performed well in 2008, increasing their share of sales to individuals. Although IFAs are still dominating sales with 65% of the market, he said the ABI's sales-to-consumers statistics showed bancassurers have upped their market share to 20%.
The figures prove the banking sector is "here to stay", he says, adding the bancassurance sector has a "bright future" within this space.
Looking forward, Shelley says there are a number of issues facing bancassurers with the main problem looking at rebuilding trust.
Responding to a question from the audience, he insists bancassurers are actively trying to regain confidence amongst consumers.
"A big piece of our work is making sure customers understood they were buying products with volatility. We understand that people are upset, but need to make sure they know what they are doing going forward," he says.
"We will also be changing the time spent gaining more clients and will instead be focusing on existing clients instead."
He also said another challenge was making the case for the bancassurance model saying sometimes people view the advice in the bancassurance sector as second class and insisted this should be defended.IFAonline
Three years at Wells Fargo
Effective from 9 December 2019
One firm with permission suspensions left
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