Last year I was enthusiastic about the Old Mutual Wealth (OMW) IGC. I am afraid my enthusiasm has turned to world-weary scepticism that the IGC packs a punch sufficient to push much forward for the members of the various legacy pensions in which 18,500 members are locked.
Only a year ago, OMW were proudly boasting that it would reduce its early exit penalties to 5%. A few months later the Government announced an exit penalty cap of 1% leaving the comments of the IGC chair, praising the adoption of a 5% penalty cap, a little redundant.
I am delighted that they have decided to take a proactive and positive approach to the committee’s findings to enhance the value-for-money they provide to their occupational pension customers
The 2017 IGC report looks a little toothless too. The report concludes
Value for money (we are told by the Chair) is subjective.
As for value generally policies have performed fairly well against these (eg market ) benchmarks. This is taking subjectivity too far, either they have or haven’t performed against benchmarks, the IGC report on value is pretty feeble.
As for money, the IGC doesn’t get to first base
It seems that whatever the state of affairs, the IGC will be delighted.
Incisive but impotent on charges
I like the way the IGC probes OMW on the various policy costs and charges within the portfolio of schemes it looks at.
It is right to push for policyholders to get the full value of the commission saved where an adviser resigns his advisory role. But again the process of resignation is in the hands of the adviser who seems to be the judge of whether he should continue to be paid commission or not.
I like the way that the IGC sets about OMW for its crazy cash default for policyholders who cannot make an investment decision. This seems an utter dereliction of the insurer’s duty to treat the customer fairly. People need to be invested in their best interest and putting a policyholder in cash when some way from retirement cannot be said to be that.
Old Mutual’s response (that policyholders no longer with an employer or an adviser should go out and get advice) ignores the market dynamics for most ordinary people – that there are no advisers wanting to do this work at a reasonable price.
The IGC should call its provider on this. The nearly 2000 policyholders (1 in 9 of those looked after by the IGC) are being treated shabbily and the IGC’s expressions of concern fall way short of the mark.
Unless something is done for these policyholders soon, there is a strong case for the IGC to refer Old Mutual Wealth to the FCA. I doubt that they would be “delighted” to do that.
The NMG research
One of the members of the OMW IGC was instrumental in organising the NMG research (commissioned through Sackers solicitors). I have been extremely uncomplimentary about the research. This may be the reason that Sackers have told us we are not on their short list of organisations to help them with round 2 of the market research. My advice to Sackers would have been to ditch any more of this nonsense and to focus on what comes out of the FCA later this summer so that we can have a non-subjective vFM measure.
We learn from the appendix of the IGC report that a total of 46 people were involved in the workshops which formed a large part of the work. This tiny sample of the 15,000 people who contributed to the bulk of the research revealed (after a day of work shopping) that they’d be prepared to pay more for a quality service and that quality was more important than price. These findings were not borne out by the mass of 15,000 who weren’t interested in price, they just wanted lots of money in retirement.
This tells me what is perfectly obvious, that people will tell you exactly what they want you to hear, especially if you’re standing in the way of going home.
The NMG research is well-meaning but ultimately hopeless, I understand it will not be re-commissioned which suggests that the OMW IGC will have to get out of bed this year.
I’m giving the OMW IGCs chair report a green for tone (it reads well)
I’m giving it a red for effectiveness – it seems to have spent the last year chasing rainbows
I’m giving it an orange for its work on value for money, as it tried hard to make the NMG report work,