Facing the music

Allied Dunbar chief executive Steve Melcher believes that reputation is still the biggest issue facing the financial services industry.

Allied Dunbar chief executive Steve Melcher believes that

reputation is still the biggest issue facing the financial services


When Steve Melcher first joined the financial services business of BAT

as finance director of Eagle Star in the late 1980s, people wisecracked:

’Eagle Star, oh yes, that’s the firm that has a sister company called

Allied Crowbar.’

Eagle Star’s sister company which sells life assurance, pensions and

investments is, of course, called Allied Dunbar. But the jibe hinted at

trouble ahead for those charged with managing the company’s


The crowbar tag had come to represent all that was bad about poor

quality sales in the life and pensions market - where lack of proper

training coincided with an explosion in the market for financial

products aided by government campaigns urging take-up of portable


Melcher is now chief executive of Allied Dunbar and Eagle Star, a job he

took on last year, and is ultimately responsible for the company’s

reputation. Much has changed in the life and pensions market since his

first encounter with Allied Dunbar: heavy fines imposed by the

regulators for pensions mis-selling, new regulations governing the sale

of financial products, commission disclosure and stringent training

requirements for sales forces.

But reputation lags reality and while his corporate affairs director Bob

Gill says he has not heard a crowbar crack from a financial journalist

for over a year - ’At every meeting it used to be ’Here’s the guy from

Crowbar,’ or ’where’s your crowbar, Bob?’’ says Gill - both men

recognise that there is still a lot of work to be done to free the

Allied Dunbar brand from its historical reputation.

’The biggest issue this industry has now is its reputation,’ says


’The pension mis-sale, the commission- hungry salesman, the high

charges, the declinitures on claims - all those things have created a

cocktail of mistrust. Solving that problem must be our biggest challenge

in spite of the fact that people need the industry more now than they

ever did because the state is looking after them less.

’That is why we are optimistic about this business because the need is

growing, not declining. But if we don’t have reputation, we don’t have


In the 1970s, the life and pensions market was heavily


In the 1980s it was about distribution. Now it is all about branding and

customer relationships. Allied Dunbar spends around pounds 20 million a

year supporting its brand, a sum equivalent to around ten per cent of

annual profits and including advertising, sales conferences and print

production costs. It has an in-house team of 15 covering PR, public

affairs and internal communications and uses Mainland PR for advice on

press relations strategy.

The company is now half way through a five-year brand building campaign

designed to position Allied Dunbar as the name in trusted, face-to-face

financial advice.

Prompted awareness is now in the high 80s, thanks to the current TV

advertising campaign which has tackled themes such as redundancy,

illness and now, death in the form of the Grim Reaper. In a sector where

products are primarily not ’sought’ (as Melcher says ’You’re unlikely to

wake up on a Saturday and say ’I’m off to buy a life policy.’’), drawing

attention to the need for insurance is crucial.

Before the campaign started there had been a two year gap since the last

TV blitz and prompted awareness had fallen to the low 60s. But awareness

is one thing, getting the ’trusted, face-to-face’ message across quite


’That’s a much more subtle job,’ says Melcher. ’Frankly, it’s a word of

mouth education process driven by the quality of the advisers we have

and the relationships we have with our customers and ensuring they are

happy with the advice we give them. That is the most compelling way in

which that reputation will get out into the market.’

Underpinning the face-to-face advice message is a pounds 25 million

investment being made in technology dubbed ACE (Achieving Competitive

Edge) which will allow Allied Dunbar’s 3,600 sales people to spend more

time advising and less time on administrative tasks. The first roll out

of the new technology is due this autumn.

Like many chief executives Melcher is closely involved with internal

communications and has changed what was previously a ’good news only’

internal culture, to a more open, ’warts-and-all’ approach.

He spends a lot of time travelling around the country meeting the sales

force and is generally only in the office for a day and a half each


He uses breakfast meetings with ten or 12 middle managers as a sounding

board for what is going on in the firm and instigated regular strategy

sessions with the company’s top 40 managers.

Externally he has chosen to take a lower profile. Gill’s communication

team, however, develop corporate position statements on hot topics for

the industry like genetics and the future of the welfare state.

While industry standards have certainly improved since the days when the

crowbar name was coined, Melcher admits that bad advice is still being

given by the industry and criticism continues. A recent World in Action

programme illustrated only too well via the use of a hidden camera that

people are still being sold the wrong financial products. Allied Dunbar

brought in broadcast expert John Stonborough to ensure that its name was

not mentioned on the programme.

In view of this, shouldn’t part of the firm’s branding strategy be aimed

at disassociating itself from others in the industry? ’You can’t,

because you’re tarred with the brush whether you like it or not,’ says


’We believe we have to keep lifting the standards of the game. The more

we do that, the more the rest will have to do that to keep pace with


Perhaps most surprising, is Melcher’s candour about the ’crowbar’ slur

and its implications. ’We don’t believe it to be true, therefore we are

not defensive about it, we’re not sensitive about it,’ he says.

While rivals such as GRE and Commericial Union have either got rid of or

reduced their direct sales forces, Allied has retained its

commission-only, self- employed sales people. ’It’s now become a

competitive advantage,’ he says.

’The most strident protagonist for the crowbar image was the IFA

(Independent Financial Adviser) sector. Even they are admitting in a

public way that it is an old image this company used to have and it no

longer applies.

People who use that term are either very out of date, biased, or running

some other agenda.’

There may be some truth in his assertion but until the pensions

mis-selling scandal is resolved, the industry’s reputation will continue

to suffer.

Allied Dunbar now has a rescue team of 170 people analysing the pension

values of people who were wrongly advised to opt out of the state


Its parent BAT has set aside pounds 145 million to cover the likely cost

of getting its customers back in.

Melcher’s belief that ’the crowbar image is half way to extinction’ is

probably closer to the truth.

Case study: Getting death on the agenda

The British have a peculiarly coy attitude to death. Talking about it in

an ad is just not on, Allied Dunbar was told by the Advertising

Standards Authority which regulates press and poster advertising. ’You

can’t use the words death, dying, dead or use anything that visually

illustrates death,’ said the ASA.

In 1992, Allied Dunbar was forced to withdraw an ad showing the view

from a coffin. The Broadcast Advertising Clearance Centre, responsible

for approving television ads made similar noises.

When your business is selling life assurance, this presents a


Like any insurance product, the idea of what might happen if you have

not got any is the strongest motivation to go and get some.

Karl Snowden, Allied Dunbar’s director of public affairs says: ’Public

service broadcasts like those warning of the dangers of drinking and

driving or from the British Heart Foundation were allowed to use the

death theme, but every time we tried it we ran into problems. There was

one rule for the charity sector and another for business.’

Snowden carried out a consultation exercise among civil servants and

politicians. Many did not know such a ban existed. In general,

opposition stemmed from the feeling that making money out of death is

somehow ’unpleasant’ and advertising that in an overt way should not be


At the same time, the firm’s advertising agency, Grey, held talks with

the BACC about treatments it was planning for a campaign that would

highlight themes such as illness, redundancy and pregnancy. The campaign

uses Potteresque techniques where the characters launch into song and

dance routines and includes ’Cubicle’ where a businessman overhears news

of his redundancy in the gents and launches into: ’There may be trouble

ahead ...’.

’In January last year the BACC started saying they were impressed with

how we had handled these issues and would be interested to see if we

tried the death theme again, how we’d handle it,’ says Snowden.

Last November the BACC finally gave the go-ahead to the firm’s most

recent campaign, ’Grim Reaper’ which tackles the issue, provided it ran

after 7.30pm.

The ASA, however, has not shifted ground and Snowden’s campaign


’We have raised the issue in political circles of the barriers we face,’

he says. ’We have tried to find an accommodation that says to

government: ’Is the problem that we are a commercial organisation? If

so, could we run a generic industry campaign, just like the drinks

industry does with Portman Group?’

Only 65 per cent of UK households have any form of life cover and on

average it is cover worth just pounds 12,000 or pounds 800 a year. With

such a market opportunity staring it in the face, Allied Dunbar will be

intent on getting a newly elected government on side and soon.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Already registered?
Sign in