We have no interest in pointing fingers at other sectors or companies, says Loney
This interview is taken from the recently published Good Conduct Report. The 10-page report can be downloaded here
Since PPI, where has the effort been on behavioural change and where do the challenges still lie?
Royal London is a top 10 UK life insurance, pensions and investment company that sells its products mainly through impartial advisers. We have not been involved in general insurance products such as PPI and so the experience of this market has not been a catalyst for us.
The real motivation behind the strategy of our company is our position as the largest customer owned insurer in the UK and Ireland. We are 100% owned by our customers and the principle way that we reward the people who own us is through the quality and performance of the propositions (product, investment performance, service, financial education) that we provide to them. Our goal is to provide the best customer outcomes and the best customer experiences in those markets that we choose to participate in.
We aim to be profitable and share these profits through our annual profit share (over £400m shared so far) which boosts the value of the savings products held by our members. Retained profits finance our growth. We work solely in the interests of our customers and members and take a long term view rather than maximizing short-term shareholder profits like many of our competitors.
Where is Royal London on the journey towards changing culture to promote good conduct?
We are two years into a strategy which we see as a five to seven year journey. Our goal is to become the most trusted and recommended provider in the life, pensions and investments sectors. We aim to achieve this by developing propositions which ensure that our customers enjoy the best outcomes and best experience available in the sector, thereby differentiating us as the quality act in our chosen markets.
Key steps in our journey so far include:
- Moving from a multi-brand strategy to a master brand which uses a new look and feel for Royal London. All of our businesses are moving to use this brand over a 2 year period and we intend to build the brand into a household name in the medium-term through advertising, sponsorship and customer recommendation.
- Restructuring our business to ensure that our businesses can share IT platforms and high quality customer service processes whilst keeping proposition development and marketing close to the key customer segments and the channels that they prefer.
- Expanding our participation into new attractive adjacent markets (e.g. workplace pensions and direct life insurance) which complement our existing personal pension and protection franchises and ensure that we can meet the saving and life insurance needs of the broad mass of the UK public.
- Launching new propositions which prove our commitment to providing customers with the best outcomes, including our new fairer life insurance for people over the age of 50 and our annuity bureau for those seeking better value for money from an annuity.
How is Royal London putting customers at the heart of the business?
Many of the tools that we are using can be seen in many businesses. We are developing stronger attitudinal and behavioural customer segmentations to guide proposition development and customer communications. We are involving our people in improving our processes, service and communications to customers, we are introducing new IT platforms to enable agile change and to support a more digital business and we are building on our already customer orientated culture.
The difference at Royal London is that we use these tools and techniques to build the best outcomes for our customers as an end in itself, reflecting that many of these customers are the members who own us. This is very different from a proprietary company which uses these techniques to maximise short-term profits for its shareholders. Compared with shareholder companies we over-invest in aspects like customer service and financial education, and we build for the long term rather than being driven by short-term earnings targets. We still make a fair level of profit but will work at lower margins than our competitors if this is necessary to give better outcomes to our customers. Profits which are beyond what is required to support and expand our business are shared with eligible members.
Where do you feel the most change in the financial services industry is necessary?
We have no interest in pointing fingers at other sectors or companies. We think that the long-term interests of consumers would best be served by a two-pronged approach:
- A long term sustained focus on improving the financial education of UK and Irish citizens and businesses, enabling them to become more discerning buyers of financial products and financial advice. No political party currently has the vision to prioritise this goal.
- A regulatory focus on ensuring that all financial markets are truly competitive. That buyers are well advised and informed, that switching supplier is easy and that barriers to entry are low. Too often well intentioned regulation or government intervention can have the opposite unintended consequences. We regularly campaign against unfair or anti-competitive practices (e.g. we successfully led the campaign to have active member discounts banned from UK workplace pensions) and against poorly conceived public policy (e.g. price capping of UK auto enrolment pensions).
What does the future look like for culture in financial services?
We expect that the strongest force for change will be competition from truly customer orientated businesses which take on the behemoths in each sector. In the long term we believe that a more customer orientated culture will prevail but we believe and hope that the process to achieve this will involve a new range of companies taking over sectoral leadership in many areas of financial services. This is likely to be the work of decades rather than years.
This interview is taken from the recently published Good Conduct Report. The 10-page report can be downloaded herec-suite interview ethical finance finance financial services green finance Royal London