From the Editor: All change for the UK life sector

If you asked a few years ago for opinions on UK life companies, the responses would have been predictable and familiar.

“Stuck in their ways”, “unwieldy” and “inflexible” may have been some of the words that came to mind.

However, things are changing under the surface of some of our most conservative institutions as they realise they must adapt to survive in a world shaped by new regulatory requirements including RDR and Solvency II.

Getting the strategy right will be crucial for the future as, unlike in the past, life companies will not be able to rely on offering huge commissions to attract advisers.

Even better for journalists covering this industry, the life companies are keener than ever before to show they are listening to their customers and are prepared to make changes to ensure they remain relevant.

Two stories from the sector made headlines this week. The first saw a largely positive reaction from advisers to the news that Trevor Matthews will be taking the role of UK CEO at Aviva.

The life giant has had its problems of late as it struggles to get its wrap proposition back on track and persuade advisers it is fully committed to the sector and is not seeking to replace them with direct to consumer offerings.

Matthews is well respected by the advisory community thanks to successful tenures at Standard Life, Friends Life and the CII. He is seen as someone who understands the needs of advisers and who is used to pushing through changes wherever he works.

Good news for Aviva then but what about the second newsworthy story, involving its rival Scottish Widows?

Almost every week there have been rumours in the national press that Lloyds is poised to sell its life arm. However, this week Scotland on Sunday reported Lloyds is likely to keep Widows following a strategic review of the business.

According to the paper, new CEO Antonio Horta-Osório believes Widows’ strong cashflows and strategic balance make it a valuable asset.

Even more intriguingly, he also believes Widows can help rebuild the bank’s relationship with its investors.

It will be an interesting world where life companies are being used to help rebuild any company’s reputation. However, they appear to be coming up smelling of roses compared to the banks and it is up to their new bosses to ensure they build on this advantage.

Katrina Baugh is editor of Professional Adviser and IFAonline.co.uk