AXA UK has announced it is ceasing its partnership with the Co-operative Banking Group and NAB-owned Yorkshire and Clydesdale Banks for the provision of face-to-face financial advice services in retail bank branches.
The company’s UK chief executive Paul Evans expressed regret at the job losses and consumer inconvenience the move would bring about, citing regulatory pressures as the RDR reforms force more service providers out of the advice space.
“AXA UK remains a strong advocate of consumers being able to access affordable advice for their particular investment needs,” Evans said.
“Following similar announcements by major retail banks, we are very disappointed that AXA UK must also now withdraw this service having not found a model which balanced the regulatory requirement that the service be profitable in its own right, whilst setting advice fees at an affordable level.”
Evans explained that the decision would result in 450 job losses and that AXA UK is currently in discussions with other bank partners and relevant trade unions to minimise the fallout.
The move follows the National Australia Bank’s announcement earlier this year that its UK banks would wind up their internal financial advice units, mirroring moves by retail banks HSBC and Lloyd’s TSB.
Deloitte predicted the widescale exodus from the British retail banking advice market in a report on the RDR reforms released in November 2012, in which the professional services firm anticipated the emergence of “advice orphans”.
“The changes mean that there will be up to 5.5 million disenfranchised customers who will either choose to cease using financial advisers or lack access to them,” Deloitte consulting partner Andrew Power wrote in the foreword to the report.
“These customers, who account for 11 per cent of UK adults, will represent a significant post-RDR advice gap.”
NAB CEO Cameron Clyne told ifa in March that similar cuts were not expected for the Australian wealth management business.
Yep, tend to agree with you Steve….It’s all got out of control now, the lawyers and unions are in full control and that normally signals a spiral of high costs and lower profit for those providing the advice. I blame dealer groups frankly and organizations like the FPA for not looking forward far enough and being too reactionary. now they just bow unto our leaders (cough) and cop a spanking.
Could have been as simple as capping commissions and being more careful about who they licensed to provide advice. Now we’ll see advisers priced out of the market and more direct distribution from our beloved product providers.
Meanwhile in Australia, the government, run by fools with ZERO experience & ministers who dont even know what a financial planner does, listen to the education course pushers/floggers bleating the only answer is more education so they can flog $1000 courses for longer.
Mums & dad investors continue to be the losers getting told they need to pay $3000 engagement (the new buzz word) fees for simple basic advice & service. Thanks fpa, thanks Shorten well done fofa! Goodbye practice resale values.