Understanding changing markets.


2012 saw significant regulatory changes, which will impact our industry and its customers. These included the Retail Distribution Review (RDR), ending the payment of commission on retail investment products, the unwelcome abolition of gender-based pricing for insurance products following a European Court ruling, and the introduction of pensions auto enrolment.

We responded effectively to these changes, introducing new RDR-compliant propositions for advisers, growing our distribution capability through new partnerships particularly with building societies, and implementing gender-neutral pricing ahead of the deadline. Pension auto-enrolment was a particular success: the Government should be congratulated for driving this through. We expect to auto-enrol 500,000 employees of major companies, including the Co-op, Boots, Asda, Barclays and Marks & Spencer by the end of 2013.

The timetable for the EU’s Solvency II legislation has slipped further, with implementation now unlikely before 2017. We submitted our internal capital model to the regulator in November. The cost of this programme for Legal & General has been almost £140m, and for the UK industry, estimated at £3bn-£4bn. We regard these costs as indefensible during a period of financial crisis.

Continued pressure on government finances continues to drive a number of significant changes in the balance between the State, the Private Sector and the Individual. As individuals and families have to become increasingly self-reliant, there is an enhanced role for responsible providers of financial solutions which help long-term saving or reduce the financial risks of unfortunate events.

We have gained a lot of the understanding of these market issues and opportunities through the not for profit partners that we have worked with in our campaigns for Housing, Health, Saving, Good Governance, Sustainable Property and Pensioner Poverty. Third Sector or Not for Profits organisations have a huge amount of knowledge and expertise in the marketplace and can help us to understand the social and economic market failures that are affecting real people’s lives. For further information see Our campaigns.

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