AEGON says proposals outlined in today’s FSA consultation paper on the implementation of its Retail Distribution Review measures go only part way towards fulfilling the Review’s original aims.

AEGON believes the objectives, set out in the FSA’s Discussion Paper in June 2007, to improve trust and confidence in the industry and widen access to professional financial advice remain as important as ever. However the company says progress over the past two years towards achieving these goals has been mixed.

Francis McGee, head of corporate affairs at AEGON UK says:

“From the implementation proposals outlined today, FSA gets a mixed report card. On the plus side the RDR has always looked as though it would deliver on improved professionalism in the advice sector and the FSA has shown it won’t compromise on the step change in standards and remuneration. Adviser charging should bring more consumer clarity on the cost of financial products and services. However FSA needs to manage its timetable to avoid a disorderly transition to a smaller independent advice market.

“Another positive is that FSA has at last begun to take a proper look at how reforms can be extended to the corporate pensions market. Hopefully this will result in better use of the work place to encourage saving.

“But FSA still needs to do a lot better if we’re to meet the original RDR aim of increasing consumer access to advice and products. The proposed ban on factoring and the blanket application of higher qualifications and adviser charging to simplified advice models are particularly disappointing in this respect. They will stifle innovation and make it more difficult for people making modest regular savings to pay for advice. FSA is now relying very heavily on the existing basic advice model, and since this hasn’t worked so far, a full review is urgently required”

On the future of the IFA sector, McGee commented,

“It’s difficult to predict how IFAs will respond. FSA say that a 20% rate of exit of IFAs would be pessimistic but this is towards the optimistic end of market expectations. Work-based alternatives to exams will clearly help. Above all FSA and the industry need to monitor this carefully. Much movement will be masked until the 2012 deadline, and no one wants customers to face a disorderly market at that stage.

Commenting on FSA’s chosen service labels, McGee said

“FSA’s proposals for distinguishing “independent” and “restricted” advice look no better or worse than other potential labels. But they’ve largely decided not to prescribe the presentation of these to customers, so we’ll need to see whether people can tell the difference between all the different types of service in the market.

Reflecting on the adviser charging proposals, McGee said

“There are few major surprises here, but much detail to wade through. You can see that FSA really mean to deliver a level playing field between banks and IFAs, which is welcome.

McGee welcomed the FSA’s acceptance of alternatives to exams for IFAs trying to reach the new qualification standards.

“Many good IFAs are understandably put off by exams. Many rightly say they are already working to the required standards. It’s absolutely right that they should have a way to demonstrate that. This move by FSA will take the pressure off for some good, experienced advisers but it will be no soft option.”

Notes to editors

In Discussion Paper 07/1, published in June 2007, the FSA said it wanted the RDR “to stimulate the delivery of a number of specific outcomes. These include

• an industry that engages with consumers in a way that delivers more clarity for them on products and services;
• a market which allows more consumers to have their needs and wants addressed;
• standards of professionalism that inspire consumer confidence and build trust;
• remuneration arrangements that allow competitive forces to work in favour of consumers;
• an industry where firms are sufficiently viable to deliver on their longer term commitments and where they treat their customers fairly; and
• a regulatory framework that can support delivery of all of these aspirations and which does not inhibit future innovation where this benefits consumers.”

In the UK AEGON offers pensions, life insurance, asset management and financial advice to around 2 million customers. AEGON UK has assets under administration of £47 billion and employs approximately 4,900 staff.

AEGON is one of the world’s leading insurance groups with approximately 30 thousand employees world wide and 40 million customers in the Americas, Europe and Asia. AEGON's revenue generating assets totalled EUR 344 billion at June 30, 2008.

For further information

Francis McGee, Head of Corporate Affairs: 0207 599 2275
Margaret Robertson, Media Relations Manager: 07740 897527
Lesley McPherson, Head of Media Relations: 0131 549 3782