News of the building society’s inauguration came hot on the heels of the announcement that Old Mutual Wealth had rejoined the trade body after eight years away from the organisation.
The recent membership hike marks a reverse in fortune for the body, which recently moved from expensive Gresham Street headquarters in the City in a cost-cutting exercise to mitigate the financial impact of dwindling membership in recent years.
Skandia, which was purchased by Old Mutual in 2007, ditched the ABI in a dispute over proposed changes to the sales rule book, and joined forces with the Association of Independent Financial Advisers – later rebranded as the Association of Professional Financial Advisers.
More notably, in 2014, Legal & General relinquished membership of the association, claiming that much of its business had fallen outside the ABI’s remit following the merger of the body’s investment unit with the Investment Management Association – latter renamed the Investment Association.
In a letter sent to then-ABI director general Otto Thoresen, who is now chairman of the National Employment Savings Trust, L&G’s chief executive Nigel Wilson also expressed a belief that business models of sector participants become more diverse and less suited to uniform representation through one trade body.
Similar reasons were given when Aegon UK quit the ABI in the latter half of 2015. Its chief executive, Adrian Grace, explained that the time was right to leave the trade body to put the company’s point of view to the government and regulator directly, and to pursue its radical modernising agenda, with an emphasis on developing its platform, to meet the needs of consumers.
Malcolm Small, executive chairman of the Retirement Income Alliance, said: “The ABI concentrated on the general insurance sector – the hint is in its title – but many insurers have made changes to their business models. Standard Life, for example, is more of an investment house now, and you would think that insurers with a similar model would align themselves with other bodies such as the Investment Association.”
The departure of two industry juggernauts proved to be a huge blow for the association, but the ABI was not down for the count. To stretch the boxing analogy further, the trade association readjusted its footing with the launch of a comprehensive reform package at its Biennial conference in November last year.
At the event, the ABI announced the appointment of Seraina Maag, president and chief executive of Europe, the Middle East and Africa at American International Group, and Russell Higginbotham, chief executive of Swiss Re UK & Ireland, to the ABI board, as part of a number of measures to make the organisation a “modern, lean and agenda-setting” business.
The board has since swollen, with the addition of Anthony Baldwin, Antonio Lorenzo, Vibhu Sharma and Julian Adams of AIF, Scottish Widows, Zurich and Prudential respectively.
Mr Small said: “These appointments serve to strengthen the body’s links with the industry, and give it a deeper understanding of the issues affecting its members.”
The body also developed an ‘associate membership’ category to allow non-insurance companies, such as legal firms, consultants and price-comparison sites and other firms which help insurers, deliver their services to join its ranks.
Insurance law firm BLM become the first company to join the ABI in this category in December last year – a mere month after the associate membership scheme was launched.
More significantly, the scheme has enabled Nationwide, the prominent building society with 15 million customers, to join the ABI.
Martyn Dyson, head of general insurance at the society, said it pounced at the earliest opportunity available to join the trade body, adding: “Nationwide is increasing its focus and growing its general insurance business. Access to market data will help the society design products and services that suit the demands and needs of its customers.
“By engaging with the trade body, we are able to be at the centre of industry-wide conversations, helping shape the wider market for the better.”
In addition, the ABI created a legacy committee to deal with historic issues, as part of a shake-up of the group’s internal structure, to sit alongside a forward-facing Long Term Savings Committee – which is tasked with keeping members ahead of the curve.
A spokesman for Old Mutual Wealth said the increasing complexity of the long-term savings market with the advent of pension freedoms, and the widely touted changes to pension taxation, meant that it was in the firm’s strategic interest to align itself with the body.
As Steven Levin, chief executive of Old Mutual Wealth, aptly put it: “As the UK’s leading wealth management company we want to ensure that we are actively engaged in debates that impact our customers.”
Commenting on the lure of trade-body membership, Steve Webb, former pensions minister and director of policy at Royal London, which is an ABI member, said: “The government wants to talk to one voice not 20, and as an ABI member, you are part of that conversation with the government. Often, the government would approach trade bodies to pitch ideas on a confidential basis.”
The ABI’s ‘modernisation’ programme begun under Mr Thoresen’s stewardship, before Huw Evans took the helm in February 2015.
Mr Webb said: “Huw and Otto are different, but both were good at what they did. The organisation has been well run [since Mr Evan’s appointment]. The move from Gresham Street, for example, was a good one. The premises are modern and economical, which is a win-win for everyone.”
The ABI reform agenda appears to have made little impression on either L&G and Aegon, however.
L&G is keeping tight-lipped about the prospect of rejoining the trade association. A spokesman for the company told Financial Adviser it had “nothing more to add” to its original statement and letter issued when news of its departure surfaced.
Aegon meanwhile has been more forthright in its response. A spokesman for the firm said it had not contacted the ABI with a view to rejoin the trade body, adding its reason for leaving the trade body still stand.
He said: “The industry has responded individually to a modernising agenda, and for our part, developing our own priorities and strategies have been demonstrated by our recent sale of our annuity business and the acquisition of the BlackRock DC platform and administration business, both of which support our platform strategy.”
Myron Jobson is a features writer at Financial Adviser
Key points
The ABI has seen two high-profile companies join its membership in recent weeks.
The trade association has suffered from equally high-profile departures recently.
The ABI has been undergoing a modernisation programme over the past few years.
