Each month, we ask our industry to answer one big question!
Nick Bladen is head of pensions marketing at Skandia
Pension transfers in particular can be cumbersome and take far too long, not least because of the number of parties involved. Providers need to take a good hard look at their processes and identify where they can be streamlined. At Skandia, we have recently thoroughly reviewed and re-engineered our transfer process, ensuring that we deliver against customer expectations. We have achieved a much leaner process and this will continue to evolve to meet future customer needs and expectations.
Good service is not just about being 'good enough'; it is about being much better than that. Providers should make every effort not just to meet industry best practice service standards, but exceed them whenever possible. Regulation can help but it is not the only answer; and there is always the danger that extra rules bring more bureaucracy and cost rather than less.
Shirley Fell is head of operations - retirement and savings at MetLife Europe
Regulation should be seen as a last ditch option but it is undeniable there is a problem that needs to be addressed. There is a hard-core of providers - usually closed fund operators - who are immune from normal business pressures to maintain service standards. They do not have to win new business so don't have to worry about impressing customers.
We all operate under the FSA's Treating Customers Fairly initiative and it has to be remembered that delays in providing information on transfer values cost consumers.
Every month that the client cannot purchase an annuity because of delays by pension providers reduces the amount of income a client may receive. Every month a transfer is not paid could mean clients missing out on investment performance.
A simple first step would be for providers to offer guidance to IFAs on all the necessary documentation to be completed and where and when it should be sent.
Regulators should start monitoring transfer times from providers and then target the poor performers. The worst offenders should then be asked for a plan to address their failings and be held to account against that plan. If they fail to perform they should face sanctions.
Steve Folkard is head of pensions and savings policy at Winterthur
Transfers of pension benefits have been a sensitive area for some time because the industry has not delivered consistent service standards in this area. The claim often levied at administrators is that they deliberately delay transfers because it is a low priority activity, where in reality it is often (particularly in the case of occupational transfers) that all of the information required to effect the transfer can take time to obtain.
It was for this reason that a number of providers, including AXA, got involved in developing the Statement of Good Practice on Transfers published through the ABI. The guidelines seek to establish agreement across a number of diverse processes and to ensure that the data requested by both the ceding and receiving contracts do not vary significantly between providers.
It is important to remember that where benefits are being consolidated into a more flexible contract from multiple sources the transfer will only ever take place at the pace of the slowest transferer, and there are often a number of parties needing to supply information. Additional regulation should not be needed in this area as it is in all companies interests to process transfers within reasonable timescales.
Andy Gadd is head of research at The Lighthouse Group
I do not believe that additional regulation is needed or indeed is required. I do believe however that the principles based approach which has been introduced by the FSA for advisers dealing with their clients could and indeed should be applied to the relationship between an IFA and a pensions provider. The IFA is after all simply the agent of the client in his or her dealings with the pensions provider and therefore a principle such as "treating the customer fairly" should be applied.
We all accept that problems do occasionally arise, we are after all just human, but when things do go wrong it is important that a pensions provider has an efficient system in place for dealing with any complaints. If this is not the case and persistent problems are encountered then, as with any service industry, IFAs must vote with their feet and direct business, especially new business, elsewhere.
Aston Goodey is business development director (retirement income) at Prudential
Working together with the ABI and other providers to standardise and simplify processes is key to improving service standards within the pensions industry. Prudential is already working closely with the ABI to this end, and believes that regulation is not the best way to overcome the challenges of improving service in this area.
Process improvements can also be made through the use of emerging technologies, and we are moving closer to improving the speed of delivery of data between organisations e.g. secure email, information exchange, online illustrations and online submission.
Engagement of other providers and organisations is essential in developing a standardised process and implementing change, which will ultimately benefit the industry as a whole.
David Greenall is distribution development manager at Canada Life
The question suggests there is not a willingness within the pensions industry to improve service standards and I would say that is harsh on providers that have made an effort. I say that with some bias as my employer is reporting a 99.3% achievement currently against a service standard of five days for transfers and similar standards across a range of processes.
There is a range of standards being set and delivered that is true, but there have also been efforts to recognise this and improve the service to our customers.
A uniform transfer process continues to be looked at and while an outcome from this work sponsored by the ABI is awaited, providers that have used their own initiative have improved standards.
Turning specifically to the question concerning regulation; this already exists within the Treating Customers Fairly principles. We are moving away from specific regulation so the concept of targeting individual issues with regulation is going against this trend, but it is incumbent within the TCF principles for providers to ensure customers receive a consistent level of service.
So in summary, we know how to improve, we have the incentive to improve. The key is focusing on improving and where this is not evidenced, powers exist within regulation to act accordingly to the benefit of the customer.
Robin Hooper is managing director of The Lifetime SIPP Company
One of the principal problems facing pensions administration is that too many traditional product providers are only geared up to mass processing of new business, rather than thinking about the specific needs of their customers.
Unfortunately, it is not in the interest of insurance companies to facilitate rapid transfers out as they see this as removing future revenue streams. They frequently appear to see this as an opportunity to apply exit penalties in order to recover (in advance) some of the lost revenue (often blaming this on acquisition costs, even where there is commission claw-back).
Regulation is not necessarily the answer; if IFAs refuse to give new business to those offices providing a sub-standard service - particularly in respect of transfers - service will improve rapidly enough.
What is more important is that customers are always treated fairly by product providers. In the case of with-profit investments this is seldom - if ever - demonstrably true.
Neil Marsh is managing director of Hornbuckle Mitchell
Slow transfer times have been a long-running issue in the industry because transferrers have had little incentive to act speedily. We have seen some transfers take up to nine months to complete and A-Day probably made the problem worse. There could be another spike in transfer activity in the autumn with changes to protected rights rules, so we hope the slow coaches - and advisers know who they are - will be more prepared this time.
In the longer term, Treating Customers Fairly rules are the best hope of alleviating this problem because they should force providers to put in place higher service standards along with monitoring procedures to ensure those standards are being met. TCF is a very positive development for clients and advisers because it should embed higher customer service standards and allow the FSA to deal strictly with those providers who are obviously falling short.
Phil Naylor is director of Legal & General's conventional annuity business
Legal & General, like most other providers does have in place benchmarks for the transfer of pension funds and the setting-up of annuity income payments. We try to ensure we meet those deadlines wherever possible but we believe that there is room for improvement. Legal & General and some other major life offices, are currently working on an initiative to speed up the process of transferring funds. We will be shortly starting a three month pilot to assess this new speedier process and if it proves to be successful in cutting down the time taken, we will look to implement the new process as soon as possible.
Part of the reason why the process can take longer than expected is because there is already various rules and regulations in place which must be followed, so further regulation may not be helpful or the answer.
Chris Read is chairman at Dunstan Thomas
The ceding scheme is never interested in prompt turnaround of transfers out. They have lost the business so what is the benefit of making it a priority? If you look at personal pensions with investments held in funds, the disinvestment turnaround should only be six working days. If you add three working days for BACS transactions and the receiving scheme could get the cash within 10 working days at most. SIPPs should be the same or quicker if only holding equities.
However, there is an actual disincentive at work here. The longer the ceding scheme holds onto the cash the more money they make. So if you take a fund value of £100,000 at five and a half per cent interest for a week this is worth £106 to the scheme, in addition to any specific transfer charges.
In our view the ceding scheme should be penalised after two weeks of receipt of the transfer release form at six per cent of the fund value per day and a minimum of £20 per day. This would stamp out widespread abuse in this area.
Andrew Tully is marketing technical manager at Standard Life
Transfers out from Standard Life are processed quickly like most other client work we do. Transfers in tend to take longer to complete - when looking at the process from end to end. We've done a lot of work on this recently to see why the process takes so long, what steps are involved and which are adding value. The key learning points have been the need to engage the member and their adviser in the process and stress the need for full and complete documentation at the outset.
It is this kind of work (from all providers) in examining and re-engineering processes from a client perspective that will make the difference in service standards throughout the industry. Not more regulation. Regulation will only drive the wrong behaviours and may result in an inferior service to the end customer if it means shortcuts are taken to meet turnaround times.
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