Purposefully understated image

A word on padding

The first thing you notice about the ReAssure IGC report is stock images. Page one and two are entirely devoted to them, page three and four have one, page five has five and page six is another stock image.   In its first six pages, the report contains a short message from the chair , a few highlights and a table of contents. . The final two pages of the report are stock photos meaning that around a fifth of a short report is expensive to print and tedious to skip over photography.  I hate to say it – but the overdose of images seems to me “padding”. Having just read the Virgin Money IGC statement (which has no photos, I would suggest to Chair Zahir Fazal that next year less (photos) is more! This includes the three identical  photos of Zahir in the report.

Tone of the report

Moving on!

The report is well written, and having met the Chair recently, it sounds like his voice that we are hearing. His chair statement sets out the big issues for members – are funds being invested responsibly, are my policy charges coming down and how can my provider help me get a pension.

I like the way the report gives clear examples of how ReAssure is cleaning up the mess left by decades of neglect on some back books.

The tone is direct and speaks to policyholder’s outcomes. This is exactly what the IGC should be saying, encouraging policyholders to pay attention and take heart.

The IGC clearly thinks that ReAssure could try harder to get policyholders to get a grip on their affairs and it isn’t afraid to mention that other options than ReAssure are available.

It’s a difficult balance between promoting your provider as a way of sorting problems out without being seen to be in the provider’s pocket. Many  of the 51 books that ReAssure looks after have been badly invested, over charged and would show very poorly in terms of outcomes (relative to a benchmark). But this is not a reason for the IGC not to promote upgrading to better Reassure options and I’m pleased to see that this is what the IGC are suggesting.

I like the tone of this report and give it a green, the 85,000 L&G policyholders who will be coming under the ReAssure IGC next year will benefit from a smooth transition into a smoothly operated governance framework.

Value for Money Assessment

The VFM Assessment is published in the report’s conclusion , which means we have to wade through quite a lot of analysis to get there. When we get there , there are the now usual series of dials that point to a mixture of green and amber ratings with no big surprises.

I am not particularly satisfied with this approach as I’m not at all sure the IGC has really done the work needed to opine as it does. The investment section in particular lacks much punch as evidenced by this case study

The reader gets the snapshot but is left wondering how he or she compares to Simon. People do want to know how they are doing but unless you are in a small group of funds (of the many offered by ReAssure, you won’t get much from this report.

The section on transaction costs , simply looks at the funds that are internally managed and under control.

These numbers have already been quoted (in £sd terms) in the Chair’s statement, but they present only a small part of the picture. I know, because I had a General Portfolio policy that my fund managers had high transaction charges and the IGC is not picking up on the many like me who are suffering! I am not comforted by the report’s explanation for not giving us a full picture of what is going on

I think it’s fair to say that External Fund Managers have been going through a bedding in period during 2019, as they get to grips with using the FCA’s new ‘Slippage Cost’ calculation.

IGCs should be being a lot tougher on providers and their external managers than that.

Member engagement , administration and other soft-factors are explored at some length in the report but to no great effect.  There are frequent expressions of disappointment that members aren’t responding to the questions being put to them (including whether they know what their IGC is). The fact is that most of the issues that members are being asked about are what members are supposed to be bothered with. The reality is that most members are bothered about their money, when they can get it and how it’s done since it was given to ReAssure and that is not what they are getting from this Value for Money Assessment.

I’ll give the VFM assessment an amber – because it is “me too” and inconclusive. The IGC should get a sharper focus – that focus must be outcome based.

Effective?

Clearly ReAssure is working, it’s getting to grips with legacy pensions and offering members a better future. As such it is a hugely important organisation and its IGC has a very important part to play in improving member outcomes.

The IGC has a new member this year who appears younger and is certainly female – both needed in a very undiverse world. I’d like to see an injection of energy into the IGC’s work, especially its work on funds.

As mentioned above, I think there is more that the IGC could and should be doing on fund governance, it should be actively involved in making sure ReAssure are rationalising funds – removing the bad ones and signposting those that are doing their job. There is a lot that can be done by the IGC to ensure that ReAssure’s ESG policies are reflected in what policyholders invest in.

If ESG is to take root within defaults, it is not enough for IGCs to watch and comment, they must not be doing things for regulatory reasons but because they believe in responsible and sustainable investments and I simply didn’t think this report showed this IGC as believing this strongly enough.

Finally , I am not convinced that ReAssure’s customer service is operating quite as well as the IGC thinks it is. I checked out Trust Pilot on ReAssure and its rating – based on recent customer reviews is not that great

I am – more on the basis of the investment section , than any other – giving this report an amber for its effectiveness. 

In conclusion

Compared to its principal rival – the Phoenix IGC but also to the Zurich IGC , this report felt a little dull , a little too padded and lacking in fire.  That said it is still a good enough report and I am sure that this Committee have it within them to improve further.

I’d really like it to focus on costs and funds as it is in ReAssure’s interest to focus on the rest. The hard part next year will be to clean up the vast array of failing funds and to focus on why those funds that underperform do so.

I hope that those findings will replace the stock photos – next year!