This week’s L&G and Nationwide announcement which confirmed a distribution tie-up for pensions, investment and protection products is sure to create a stir within the industry. From a pensions point of view this move represents the first banking and life office tie-up for a while and would seem like a very logical and shrewd progression for these companies with the way that the distribution market is moving.It also brings together two strong and trusted consumer brands. Both L&G and Nationwide figured in the top 20 most trusted companies as selected by consumers in research carried out by GfK NOP for Defaqto’s Retirement Savings & Income report 2007. Defaqto asked 1,000 consumers to state which companies, from a pre-defined list of financial services and retail brands, they would trust with their retirement savings. Nationwide and L&G figured prominently, ranking 4th and 16th respectively.In the proposed distribution landscape mapped out by the FSA’s Retail Distribution Review, high street banks in the UK would seem to be set fair for key involvement in providing consumers with affordable access to savings advice and products.
The L&G and Nationwide announcement signals an early example of major UK institutions paying heed to the future of the distribution market and Defaqto would expect to see similar new deals announced or existing relationships embellished in this area.
With the RDR in mind this is probably a ruse to hide a large commission payment. I would imagine that the ultimate client will not have a transparent commission charge deducted but the underlying product will be built on such a way that there is a tiered payment from L&G to Nationwide on business written. Everybody is happy until the client compares his deal with one from an independent adviser.report this comment