Although Raising Standards sounds like a primary school's attempt to improve its pupils' reading and writing, it is also the name chosen by the insurance industry for a new initiative which it hopes will enhance its dire image.
After a string of scandals and months of bad publicity – from the Equitable Life debacle to the collapse of Independent Insurance and demands for the Financial Services Authority to reinvestigate the mis-selling of endowments – the public is losing faith. Research shows we are turning to other equity investments and to property as alternatives to pensions for funding retirement.
The industry's response is the voluntary quality mark. UK pensions, protection and investment providers must meet eight standards to qualify for accreditation. Last week, the first insurers to achieve the standard were unveiled: Co-operative Insurance Society (CIS), Norwich Union, Scottish Equitable, Scottish Widows and UNUM. A further 44 have expressed an interest.
Now they have gained accreditation, the successful firms can use the scheme's quality mark – symbolising clarity, quality and service – on their literature. Backed by the Association of British Insurers (ABI), the quality mark works in a similar way to a kite-mark, defining approved codes of practice so consumers know what to expect. Those buying pensions, protection and investments will be able to identify firms that have met the minimum service standards – communicating in clear language, abolishing confusing terms, and giving consumers regular updates on how their products are performing.
CIS has spent £3m over the past two years working towards accreditation and has rewritten 800 of its documents. "There is a lot more hard work to be done," says Russ Brady at CIS. "We have not actually delivered anything to the customer yet. We will only know how successful these changes will be in a year's time when we find out if we have better [customer] retention rates."
Mr Brady believes that, faced with a choice between an accredited and a non-accredited company, consumers will choose the former. "Our literature is now so straightforward that it gives people a better understanding of how a life fund operates. We had to go through the entire product range and put it under the microscope."
But not everyone is convinced. Skandia Life has not sought accreditation, nor has it any plans to do so in the foreseeable future. "We take very seriously a lot of the issues involved in Raising Standards and have done a lot of work in ensuring our products meet the standards," says Bill West, group marketing director. "For example, our policyholders have 30 days to cancel policies and we have been through the process of putting all our point-of-sale literature in plain English.
"But the way that with-profits and unit-linked products aren't treated in the same way in these standards is a real fudge. Their transparency and an explanation of what actually goes on in these funds is not addressed."
Mr West believes Skandia's time would be better addressed improving its business rather than "dressing our products with another logo when many people won't even know what it is".
The Pensions Protection and Investments Accreditation Board will monitor accredited companies to ensure they continue to meet standards. But John Cox, chief executive of the PPIAB, warns that the effectiveness of the scheme may be limited: "I don't believe that if Equitable Life had been accredited, that would have prevented its financial demise. We don't have a formal regulatory role and don't have a role in relation to the management of funds."
Despite such limitations, the overall feeling is that something had to be done. Sandy Leitch, UK chief executive of Zurich Financial Services, says this could be the industry's last chance to put its own house in order before the Government intervenes. "The quality mark is essentially good for showing we can self-regulate and raise standards," he says. "If and when we deliver, the price of products will be lighter on consumers while making for a more effective regulatory regime."Reuse content