The Reassure IGC report for 2022 tells a different story from the headline. Not only did Reassure provide value for money in 2022 but it provided it in 2021 as well.

Digging down into the complaints about ReAssure’s “appalling service”, its independent governance committee’s assessment tells a different story.

Customer Service

Overall, the IGC has determined a score of 31 out of 42 (74%) and a rating of GREEN for the customer service element of value for money for the following reasons:
• Over 90% of transactions were completed within their target time consistently over the year. This is a large improvement from the 2021 position.
• Customer satisfaction levels have continued to improve with over 90% of customers saying they were satisfied or very satisfied with their experience.
• Complaints handling processes have stabilised, with an average resolution time now less than 10 days.
• Improvements have been made to processes supporting vulnerable customers. In addition, online account viewing services are available to more of you.
• External benchmarking has assessed ReAssure favourably in relation to other providers for core transaction processing, automation and the tracing of customers the firm has lost contact with.

However, complaint levels continue to be higher than other providers.

Reading on in the report we get more detail about these complaints

Things are getting better, but these complaint numbers are still high and hardly suggest that ReAssure should merit a green traffic light for the service it gives. It sounds like the IGC is toughing this one out, taking one for the team. The trouble is that it’s supposed to be working for the consumers and not ReAssure or its parent Phoenix.

The same criticism can be made about ReAssure’s IGC report on the cost and charges levied by the company it is reporting on

We read in the IGC’s VFM assessment that

The average costs and charges paid by policyholders (weighted by fund value) is 1.42% pa, which is significantly higher than those paid by policyholders of other workplace pension providers. These policies were initiated through Independent Financial Advisers (IFAs) and have a defining characteristic that investment choice was based on an “open architecture” approach, which gave IFAs access to hundreds of external investment funds.

The implication is that the IFAs have chosen expensive fund options. This may have been appropriate if we knew the outcomes of these decisions, but the advisers seem to have set a pretty high bar for value to be created. With the average workplace pension default costing around a third of 1.42%, we have to wonder about the value of third party charges averaging 0.87%. Presumably that question is outside the scope of the IGC.

I would expect that Phoenix would have brought some order to the chaos described by IFAs of ReAssure, but the IGC report accepts that there have been major failings in the reporting of ReAssure to the IGC

Compared to the data in our previous report, the proportion of ex-L&G customers reported to be paying charges above 0.75% has materially increased. ReAssure has confirmed that this was a data issue where members who were invested in unitised with-profits (UWP) funds were being reported to have a 0% annual management charged instead of the correct 0.70% annual management charge.

this should be a red flag to the IGC and a red flag to savers. It is not just the internal reporting that is a problem, a large number of the funds offered under “open architecture” aren’t reporting their charges to the IGC. The IGC is not getting the basic information to benchmark charges against rivals.

Given the above, and the FCA requirement to measure value for money against reasonably comparable comparators available in the market, we have strongly challenged ReAssure on why they view the level of charges being paid by some ReAssure Ltd (other heritages) customers as providing value for money given the comparators in the market and the alternative funds they themselves offer. We await a response from ReAssure on this challenge. We are very disappointed that this challenge remains outstanding despite it being raised over 12 months ago and
continue to await a satisfactory response from ReAssure on this challenge.

There continues to be gaps in the reporting of Transaction costs for a number of Third Party Funds. We continue to strongly challenge ReAssure around the sourcing of this data, but recognise that they are reliant on this being supplied by the Third Party Funds.

And yet, despite all this, the IGC gives ReAssure a Green/Amber rating for its cost and charges

Investment

Unlike the extensive sections of the IGC report on service, communications, ESG and charges, the IGC has very little to say (and virtually no numbers) on investment performance. This may be because the numbers weren’t available – like the details on the charges – but that is speculation.

We learn that

Key managed and default funds are delivering sufficient returns on your retirement savings over the medium and longer-term to provide a decent outcome when you retire, without taking too much investment risk and after taking inflation into account.

This grandiose statement is not backed up with much evidence. It is however the basis for the value assessment

Overall, the IGC has given ReAssure a rating of GREEN for Investment Performance

But from what we can glean from the various parts of the report dealing with investments performance was “mixed”.

To put the mixed performance of 2021-22 into perspective, the IGC is reassured that the long-term results from ReAssure’s multi-asset and key index funds are reasonable in terms of their growth and hence purchasing power versus inflation.

The range of ReAssure funds also perform relatively well against their competitors. As the chart below shows, depending on the time period examined, about 45-50% of all available funds were ranked in the top half of the table against similar competitor funds over all the periods we look at

This tells me very little. I would like to know winners and losers in the choice of these funds and considerably more information than we get about what is actually going on with the multi-asset funds and key index funds that are presumably carrying the bulk of the investment load.

While I don’t have enough information in the report to conclude otherwise, I am suspicious of the green VFM rating – especially in the light of assessments of service and charges.

Investment pathways

I am also suspicious about the blame being put on savers for abusing investment pathways

Many customers seem more focussed on using Investment Pathways to access tax-free cash now, rather than make longer-term decisions about future income in retirement.

The IGC is keen to see how ReAssure responds to this and strengthens its communications to reduce the risk of customers taking inappropriate actions.

It is, however, reassured that all customers who make a withdrawal are contacted as a consequence and informed of the purpose of the pathway and risks of acting differently

Perhaps the deficiency is in the pathway, not in the customers use of the pathway

Conclusions

This is a long (over 100 pages) report that is hard to navigate. The headlines are at the front, the middle is the analysis and there is further stuff at the back which seems to broadly repeat the analysis. The report uses a series of tabs which make it easy to get around – but I didn’t get clarity when I got to a new section, about what the section was trying to do. The trick worked for Standard Life but it doesn’t work so well here. The tone and language of the report, as you’d expect from David Hare – are excellent. I will (with reservations) give the report a green as a read.

The value for money assessment looks flawed. I don’t see evidence from my dealings with ReAssure or from the report, to suggest that press comment detailed at the top of this blog, is wrong. I can’t see how the charges on large parts of the ReAssure book are green/amber and I am unconvinced that investment performance merits a green. I do not have evidence to suggest the VFM assessment is wrong, but nor am I convinced it is right. I give it an amber

As far as being effective, I doubt that David Hare and his team have had the time to pay ReAssure the attention given to Standard Life and Phoenix books. ReAssure looks like it has been left behind and I question whether one IGC body can cover ReAssure as well as the other books within the Phoenix Group. Although the report does not mince its words about the failures of ReAssure to not get it the data it needs, it’s clear savers need a less-stretched IGC board to get remedial action in place. I give the IGC an amber for effectiveness, the intent is there but the members are spread too thinly