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
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
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
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
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
’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
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.