Barclays cuts exclusive link with L&G to team up with six providers

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The Independent Online

Legal & General, the UK insurer, was finally stripped of its exclusive relationship with Barclays yesterday as the bank announced plans to revamp its financial advice proposition. It opted to tie to six major life insurers rather than one.

Legal & General, the UK insurer, was finally stripped of its exclusive relationship with Barclays yesterday as the bank announced plans to revamp its financial advice proposition. It opted to tie to six major life insurers rather than one.

L&G will now be joined on a panel of providers by Axa, Friends Provident, Norwich Union, Prudential and Standard Life, through which Barclays will put all its new life and pensions business going forward.

As part of the move, the bank plans to merge its independent financial advice arm with its main branch distribution network. However, it will maintain the independent status for its business advice arm, Sedgwick, and its wealth management division, Gerrard, whose advisers will continue to be able to select products from the whole market.

L&G played down the significance of the move, saying Barclays' decision to merge its IFA arm into the multi-tied proposition would ensure it was given the chance to compete for a part of a bigger proportion of the bank's business. It added that it will maintain its exclusive link with the bank for protection products sold alongside its mortgages, believed to account for a sizeable amount of the current revenue it receives from its tie.

Robin Phipps, L&G's executive director of UK operations, said: "We will continue to be greatly involved in Barclays' life, pensions and investment businesses. Though the mix of business we receive will change, we estimate the overall volumes we will receive in 2005 will be above those of 2004."

The move makes Barclays only the second major bank to take advantage of new regulations allowing financial services distributors to tie to a handful of providers. Under the previous rules, distributors had to be either independent - choosing products for their client across the whole market - or tied to one provider. However, after 15 years, this regime was scrapped at the end of last year.

HSBC recently announced plans to tie to a handful of fund managers for all branch sales of investment funds, but has as yet to announce proposals for the distribution of life and pensions. It remains unclear whether groups such as Royal Bank of Scotland, Lloyds TSB, Abbey and HBOS will change their distribution arrangements after the introduction of the new rules.

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