Advisers are understood to be worried that service levels could fall now they are being administered by Phoenix, with some pointing to their own experiences of poor service following its acquisition of the Axa SunLife book. One adviser told Corporate Adviser that “all Standard schemes are now in play”, with others lamented the decline of yet another pension life office in a consolidating market, questioning the brand strength of a company for whom ‘zombie’ is the first word that appears on a search on Google News.
SLA says it will continue to distribute a white-labelled version of the Phoenix-run pension and will remain responsible for proposition design and development, while the back-office administration and ownership of the schemes and Sipps will transfer to Phoenix. However, advisers have questioned how such a proposition will work, arguing SLA will not be likely to want to invest capital over the long term into a pensions proposition it does not own. They have also questioned why SLA, which has a professed desire to become a pure-play asset manager, would retain a meaningful marketing and product development team for a pensions business it does not own.
Phoenix says service fears are unfounded and argues it is in its interest to keep its customers happy.
Under the deal Phoenix’s other customers will be given access to SLA products. SLA has taken a 20 per cent stake in Phoenix. Phoenix says it “will manufacture capital-light, growing, fee business which will be sold, branded and marketed by Standard Life Aberdeen, while the operational burden and risk associated with marketing new business will remain with Standard Life Aberdeen”. It says SLA will not be the only investment manager used by Phoenix, although it will be the provider of defaults.
SLA sold its workplace pensions and Sipp book to Phoenix Group for £3.4bn, following the collapse of a proposed merger of the business with Scottish Widows.
SLA says it is too early to say whether there will be any job losses.
Disagreement over how to structure a combined Scottish Widows / Standard Life pension provider left a proposed deal between the two Edinburgh giants dead in the water and was the trigger for Lloyds Banking Group’s (LBG) withdrawal of £109bn of SWIP assets from SLA.
LBG reportedly wanted to retain control of the operation by making it a subsidiary while SLA favoured the creation of a joint venture run as standalone company.
Phoenix group chief executive Clive Bannister rejected claims that business would walk from the provider on service grounds saying: “I categorically reject part of your statement which suggests that we don’t care about customers … we started in 2014, and identified how we serve policyholders. It matters; it matters first of all because it’s the right thing to do. It matters because it’s economically very sensible to us if you have a big unit-linked book and what we’re about to buy has 70 per cent unit-linked and 20 per cent with profits and 10 per cent annuities. So if you don’t maintain that persistency you have a lapse challenge.”
Phoenix chief executive Andy Moss told analysts: “Yes obviously the EBCs and the employer selects the fund; Standard Life will be in control of the distribution so obviously there will be other ASI funds available as well as the default fund, but yes in theory that is absolutely possible for them to choose other funds, as is the case now.”
A spokesperson for SLA says: “Since the announcement we have been in regular communication with our workplace clients and advisers to discuss the proposed sale and to listen to their feedback.”
Syndaxi Financial Planning director Robert Reid says: “Everyone will attack the Standard book now. Nobody will have written any schemes for some time, because of the merger. That will have led to EBCs taking them off their lists. Going forward these schemes are going to be challenged. And there are good reasons to. They are not cheap schemes. I have a client who is in a Standard GPP. She is earning £250,000 a year and is one of around 40 people at that pay grade. The Standard GPP is charging 55bps.”
Cavendish Ware associate director Roy McLoughlin says: “I just think it is sad to see one of the great brands of life insurance disappear from the provider market in this way. Standard Life was one of the three most recognisable brands for pensions. Now it’s going to be a white-label of Phoenix.”
