STANDARD Life expects to boost its UK business by two million customers over the next three years on the back of regulatory changes coming into force this month.
Paul Matthews, chief executive of the firm’s UK and Europe division, said the company has “never been in a better position” due to a £600 million investment in its systems to prepare for changes under the Retail Distribution Review (RDR) and pensions auto- enrolment.
He said: “We have four million customers today. With what is happening with pension reform and auto-enrolment, I can see us moving to six million in the next two to three years.”
Tomorrow, the insurance giant will “go live” with the range of services it has developed ahead of changes to the long-term savings and investment industry being ushered in by the RDR.
The insurer will also sign up its first auto-enrolment customer, a “FTSE-listed household name”, in the next two weeks. A “massive” 500 further companies have arranged a scheme with Standard Life since rules came into force this month that force certain companies to provide their employees with a pension scheme.
Standard Life is already the largest pension provider in the UK, Matthews said, adding that the insurer could boost its share of pensions in the UK from 17 per cent to 25 per cent.
Matthews said that, out of the two million new customers, around 400,000 would be individuals signed up to a pension through auto-enrolment.
Last week, the group signed an agreement to offer advice and investment platforms to Royal Bank of Scotland, which could bring in a further million customers.
The insurer also expects to have an edge on its competitors as a result of the RDR rules coming into force in January, which will ban product providers from incentivising advisers to sell financial products with commissions. Unlike most of the industry, Standard Life has not paid commissions for eight years. When the company axed paying commissions on sales in 2004, it saved £300m a year.
Matthews admits he was “public enemy number one” in his role of head of sales at the time but that the firm’s “bad luck was our good luck”.
“Some companies have only been able to sell their products because they have paid someone to sell them. We have not been paying anyone to sell them,” he said.
“That puts us in a really strong position.”
He admitted that the board of Standard Life, led by chief executive David Nish, “took some stick” from critics who said they were spending too much – around £200m per year for three years – on IT systems and processes ahead of the changes in legislation.
“People said we were spending too much money,” said Matthews. “We don’t think others are spending enough money. They are spending more on commission. When it is gone, it is gone. We have been spending that money productively, in our view, in the future.”
Matthews also hinted that the firm would be more aggressive in marketing its products in 2013 to bring them into line with bigger-spending rivals.
“If you look at the amount of advertising we do versus the industry, we are tiny,” he said.
“At some stage we need to come out and tell people what we are doing. I am not sure we are going to do a Richard Branson. You will see more from us next year.”
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