NRI Papers
No.95 September 1, 2005
  Dynamism in Reforming Financial Product Distribution Channels in the United Kingdom  
      In the United Kingdom, life insurance and pensions account for the largest rate among all household financial assets owned. This rate amounts to double that in Japan. Specialists known as independent financial advisors (IFAs) show their significant presence as the distribution channel for such products.
      IFAs are financial intermediaries that were given birth by the unique Polarisation Rules in the United Kingdom that require selection between being tied to one company or being independent to handle all products from across the market. The background factor behind the success of IFAs in building their current strong position in the market is not only that one-stop shopping from among all financial products is available through IFAs, but also that IFAs can offer customized financial products to meet customer needs.
      Before the 1990s, similar to the situation in Japan, the direct sales force of life insurance companies constituted a major distribution channel in the United Kingdom. However, with the emergence of the Polarisation Rules and the implementation of measures to strengthen compliance, insurance companies promoted the outsourcing of sales activities as part of their marketing strategies. In the course of this process, the insurance companies started to clarify their strategy of focusing on IFAs.
      In December 2004, the Polarisation Rules were abolished. Consequently, changes in the distribution channels for financial products are now taking place. At the same time, life insurance companies are further enhancing their structures to support IFAs.
      In Japan as well, distribution channels for financial products are now being diversified. In order for financial institutions to survive as leading distribution channels, how they stir up new customer needs will be a key factor in addition to their capability to provide one-stop shopping and their ability to sufficiently meet existing consumer needs.
I Major Distribution Channels for Financial Products in the United Kingdom
  1 Breakdown of Personal Financial Assets in the United Kingdom
  2 Major Distribution Channels for Financial Products
II IFAs Have Built a Firm Position
  1 IFAs Handling Products of All Financial Institutions
  2 Introduction of the Polarisation Rule
  3 Six Types of IFAs
  4 Methods Adopted by IFAs to Acquire Customers
  5 Services Provided by IFAs
  6 Differences between Banks and IFAs
III Progress in Separating Production and Sales
  1 Reducing the Direct Sales Force at Life Insurance Companies
  2 Life Insurance Companies Making Use of IFAs
  3 Abolition of Polarisation Rules
  4 Life Insurance Companies Starting Investments in Large IFAs
  5 Acquiring and Retaining IFAs
IV Suggestions to Japan
  1 Distribution Channels Desired by Consumers
  2 Establishment of Distribution Channels for Customized Financial Products


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