ANALYSIS: Pensions firms start to plan for the future - The mis-selling of pensions created a long lasting suspicion of the industry, but careful evaluation of the issue and actions taken by pension firms are slowly changing perceptions

Despite the departure of Helen Liddell, tormentor-in-chief of pensions companies, from her post of economic secretary for the Treasury in the recent cabinet reshuffle, there has been little let-up for pensions firms embroiled in allegations of mis-selling.

Despite the departure of Helen Liddell, tormentor-in-chief of

pensions companies, from her post of economic secretary for the Treasury

in the recent cabinet reshuffle, there has been little let-up for

pensions firms embroiled in allegations of mis-selling.

Liddell’s replacement at the treasury, Patricia Hewitt, used her first

ministerial speech to highlight the ongoing problem of mis-selling. The

fire was fanned last month with reports in the Sunday Times that the

Prudential, Britain’s largest pensions company, could face a Scotland

Yard investigation into criminal mis-selling.

Cases of pensions mis-selling, many dating back to the late-1980s,

involve advisers at pensions firms wrongly recommending a switch out of

company schemes into private schemes.

The Prudential was recently taken off the Government’s 41-strong ’name

and shame’ list of firms accused of pensions mis-selling because it is

now in the process of settling the bulk of its cases.

However, the issue is far from dead says Jeremy Reynolds, previously a

policy and campaigns expert at the RAC and Friends of the Earth and

recently hired by Prudential to help its team tackle the mis-selling

issue head on. He says: ’The way we have approached mis-selling latterly

is to say ’yes it happened, mistakes were made but we’ll put it


The Prudential and other firms have admitted that they made initial

mistakes in the way in which they approached the mis-selling issue. Four

years ago its then chief executive Mick Newmarch told a Parliamentary

Committee that his company was not involved in pensions mis-selling. Now

the company, steered by Sir Peter Davis, is far more realistic in facing

the situation.

Reynolds adds that the mis-selling issue has had a broader effect on the

public and journalists’ perceptions of the industry. ’Trying to project

a squeaky clean image with all the prejudice that is around is


To change perceptions of the organisation we have to deal with the

negatives first. It is no good singing a company’s praises while there

are still skeletons in the cupboard.’

However, now there is at least light at the end of the tunnel. Companies

such as Barclays Life, Commercial Union and Royal and Sun Alliance can

also point towards their removal from the treasury’s ’shame’ list.

During the last three years the pensions industry has closed ranks to

tackle the issue. The Association of British Insurers (ABI), which

represents many firms accused of mis-selling, has a sophisticated

research and evaluation scheme in place to help its members.

It keeps press cuttings of every story published on the issue but goes

further than this. Tony Baker, deputy director-general of the ABI, says:

’We know exactly which journalists and newspapers are covering

mis-selling and what stance they are taking. This means we know who to


This is a more difficult task than it sounds and involved an audit of

individual journalists on the issue. Baker says that in a recent

six-month period 372 journalists covered the issue and these ranged from

financial product writers to lobby correspondents interested in the

Government angle.

The ABI also holds regular meetings for its members and fully briefs

their PR departments on developments across the industry. It has worked

on an agreement that its members will not use the mis-selling issue for

competitive advantage by comparing performance against other


Tony Langham, managing director of financial PR firm Lansons

Communications, says that companies are handling the issue well but

there is still a long way to go. ’Companies have been confused in their

approach. In the early days they took the approach that, yes the

industry was mis-selling, but that this happened in every walk of life

and was inevitable.’

The problem was that the press didn’t care as long as they had a stick

to beat firms with and several companies took a hammering. ’Now pensions

firms are getting things sorted out and not overclaiming in their PR,’

says Langham.

And journalists’ attitudes are changing. While they are more cynical

about pensions firms, Baker says: ’Generally speaking they are bored

with the whole story.’

This can provide PR departments with opportunities. For instance,

potential issues such as reaching targets for settling cases can be

raised. However, Baker and Langham both warn that it can be dangerous to

get carried away with the positives. Many PR departments still shy away

from providing upbeat case studies because journalists only need one

example of a horror story to counter this.

Instead many firms are concentrating on briefings with journalists and

on public affairs to turn things around. This element of the PR effort

is now vital as the Government becomes increasingly concerned that if it

makes private pensions compulsory it will be driving up the profits of

the very firms it has spent the last year or so attacking.

Companies such as the Prudential say that they are working on building

up trust with the Government and other decision makers. They also know

that they have a disillusioned general public to win around. This may be

the harder battle as the pounds 15 billion cost of pensions mis-selling

is slowly settled.

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