AXA UK has blamed regulatory pressures for a decision to cease its face-to-face financial advice offering in the retail branches of the Co-operative Banking Group and NAB-owned Clydesdale and Yorkshire banks, leading to 450 job losses.
In a statement, AXA UK’s chief executive Paul Evans expressed regret at the decision, claiming the company was unable to find a way of keeping the service afloat as the UK financial advice industry comes under increasing pressure from the Retail Distribution Review (RDR) reforms.
The RDR came into force on January 1, containing measures that mirror many of Australia’s Future of Financial Advice changes.
“AXA UK remains a strong advocate of consumers being able to access affordable advice for their particular investment needs” Mr 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.”
AXA UK has been consulting with bank partners and trade unions to minimise the fallout from the 450 job losses. The company said its call centre advice service will remain operational.
The announcement follows the withdrawal of the Yorkshire and Clydesdale Banks’ advice offering, first announced by parent company National Australia Bank in 2012, and reports of similar decisions by UK retail banks HSBC and Lloyds TSB.
An editorial in The Scotsman newspaper last week railed against the loss of retail banking financial advice options now open to British consumers, pointing to the rise of “DIY investing”.
“[The RDR] rules that came into force in January have driven thousands of financial advisers out of the industry and forced others to turn their backs on clients they don’t consider sufficiently affluent,” the editorial stated.
The changes now evident in the UK advice market were predicted by Deloitte in its November 2012 report into the impact of the RDR on retail investment, based on a survey off more than 2,000 British consumers.
The report anticipated the emergence of “advice orphans” as retail banks close or consolidate offering, pricing some retail investors out of professional advice.
“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.”
The RDR closely mirrors the Australian FOFA reform suite in their stated intention to protect consumers and increased restrictions on product commissions.
Speaking to InvestorDaily in March, NAB chief executive Cameron Clyne said the banking group did not intend to implement similar changes to its retail advice offering in Australia.
“That decision [to cut the advice offerings of NAB-owned UK banks] is specific to the UK and related to some legacy issues there,” he said. “It’s not reflective of our strategy for our wealth franchise in Australia.”
