Around 41 financial services firms have signed up to the ABI's Raising Standards quality mark scheme ...
The ABI launched the quality mark scheme last month to help repair consumer faith in the insurance industry. Only those providers whose entire product range meets or exceeds the standards set by the scheme will be awarded a quality mark. The scheme is part of the ABI's Savings and Long Term Risk initiative (SALTR) and has the support of the Government, the Financial Services Authority (FSA) and the Association of Independent Financial Advisers (AIFA). It has been designed to ensure that life offices adhere to a number of promises, including clear and comparable information, appropriateness of products purchased and quality of service.
The groups which have not yet signed up include Virgin and Legal & General. John Morgan, spokesman for Legal & General, said: "In our view the biggest issue facing assurers is the cost of products and SALTR does not address this.
"The FSA is the primary regulator of the industry, it sets the standards and we do not want to see consumers confused by other bodies. We are not saying that we are not going to join. We are saying that we are not joining at the moment."
Brands aiming to match the promises under the scheme must make sure that they meet the standards that underpin them. For example, the promise covering clear and comparable information requires brands to describe the features, benefits, costs and charges in a standard format. The overall impact of charges must be illustrated by a reduction in yield calculation at three defined periods in the key features document, and customers with investment products must receive a statement at least once a year.
The scheme covers products bought by individuals for their long-term saving and protection requirements, including individual life and pension products, and ISAs. The quality marks will be awarded by the Pensions Protection and Investments Accreditation Board, which is a new independent body, set up by the initiative.
But the scheme has received criticism for not setting higher standards, and for not setting the same stringent guidelines which are required for CAT-marked mortgages or for stakeholder pensions. However, Geoff Brown, managing director of BUPA Healthcare supports the initiative. "It might not meet these standards but standardisation will help the customer more. It is the first step and we will have further steps in the future."
Rosalind Pearson, personal finance research and planning manager at Swiss Life, said that the success of the scheme relies on every provider signing up. "Overall, the industry has an image problem due to the pensions review and endowments and while it is doing its utmost to fix these problems, the industry does need to be seen to make a proactive effort to clean up its act."
