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PRODUCT PROVIDER<br />
DUE DILIGENCE<br />
JULY 2021
2<br />
TABLE OF CONTENTS<br />
OUR DUE DILIGENCE PROCESS _____________________________________________ 3<br />
SETTING OUT THE KEY CRITERIA ___________________________________________ 4<br />
The ‘Triple Factor’ ________________________________________________________ 4<br />
Overall Financial Strength Rating ____________________________________________ 4<br />
Why ________________________________________________________________________ 4<br />
Why AKG ____________________________________________________________________ 4<br />
Product providers that meet this criterion ___________________________________________ 5<br />
Wrap providers that meet this criterion _____________________________________________ 5<br />
Star Rating ______________________________________________________________ 6<br />
Why ________________________________________________________________________ 6<br />
Why Defaqto _________________________________________________________________ 6<br />
Product providers that meet this criterion ___________________________________________ 7<br />
Wrap providers that meet this criterion _____________________________________________ 7<br />
Service Rating ___________________________________________________________ 8<br />
Why ________________________________________________________________________ 8<br />
Why Defaqto _________________________________________________________________ 8<br />
Product providers that meet this criterion ___________________________________________ 9<br />
Wrap providers that meet this criterion _____________________________________________ 9<br />
IDENTIFYING THE PRODUCT PROVIDERS THAT MEET OUR KEY CRITERIA _______ 10<br />
The ‘Triple Factor’ _______________________________________________________ 10<br />
Product providers that meet the ‘triple factor’: _______________________________________ 10<br />
Wrap providers that meet the ‘triple factor’: _________________________________________ 10<br />
SUBSEQUENT CONSIDERATION ____________________________________________ 11<br />
Image and Strategy Rating ________________________________________________ 11<br />
Why _______________________________________________________________________ 11<br />
Why AKG ___________________________________________________________________ 11<br />
Ratings applicable to product providers: ___________________________________________ 11<br />
Ratings applicable to Wrap providers: _____________________________________________ 12<br />
REVIEWING PRODUCT AND WRAP PROVIDERS AT PERIODIC INTERVALS TO ENSURE<br />
CRITERIA STANDARDS ARE MET ___________________________________________ 13
3<br />
OUR DUE DILIGENCE PROCESS<br />
The Financial Conduct Authority (FCA) have not set out a defined process for firms to follow<br />
when assessing the services of a product provider. The approaches taken will vary in different<br />
circumstances and to a large extent are influenced by the type of service the intermediary is<br />
seeking. It is possible that the solutions we identify may involve more than one product provider.<br />
When advising clients on a provider, we are taking the responsibility for the suitability of that<br />
product provider. Therefore, as the process by which we reach that conclusion should be<br />
robust, we must adhere to our own due diligence process whenever recommending a product<br />
provider:<br />
1. Set out the key criteria by which we will assess the product providers.<br />
2. Identify the product providers that meet our criteria.<br />
3. Periodically review the product providers to ensure criteria standards are being met.<br />
It is important to document each stage of the process in order to demonstrate the process if<br />
called upon to do so.<br />
Our diligence process will be undertaken by a person who is reasonably qualified by their ability,<br />
their appropriate knowledge, and their practical experience of financial matters. The person<br />
can, when they consider appropriate, consult Members of the Technical Committee for further<br />
guidance.
4<br />
SETTING OUT THE KEY CRITERIA<br />
The ‘Triple Factor’<br />
Leabold operates its due diligence process under the ‘Triple Factor’. This means that product<br />
provider must meet three key criteria standards in order to obtain a place on our panel of<br />
preferred product providers.<br />
Overall Financial Strength Rating<br />
The product provider must have been awarded an Overall Financial Strength Rating of ‘B+’ or<br />
higher by AKG.<br />
Why<br />
The Overall Financial Strength Rating requirement is to ascertain a product provider's ability to<br />
deliver sustained provision of products. We believe the financial strength of a provider is<br />
important to enable the provider to maintain and develop critical systems. It may also reduce<br />
pressure to increase charges to customers in the event of adverse economic or trading<br />
conditions.<br />
We believe that financial strength is also important because from the customer’s perspective it<br />
is the product provider (not some higher corporate entity) that needs to survive in a form that<br />
maintains the requisite operational characteristics required to meet their individual needs.<br />
Why AKG<br />
AKG are a leading independent organisation specialising in the provision of assessment,<br />
ratings, information and consultancy to the financial services industry.<br />
For over 20 years AKG has particularly focused on providing financial strength information to<br />
those who need to ascertain a company's ability to deliver sustained provision of products<br />
or services.
5<br />
Their rating system takes into account those of the following criteria which are relevant<br />
(depending upon the company's mix of business in-force): capital and asset position, expense<br />
position and profitability, structure (and size) of funds within the company, parental strength<br />
(and likely attitude towards supporting the company), operational capability, management<br />
strength and capability, strategic position and rationale, brand and image, typical fund<br />
performance achievements or product / service features, its operating environment and ability<br />
to withstand external forces. The ratings available extend from ‘D’ (very weak) to A (superior):<br />
A<br />
B +<br />
B<br />
B -<br />
C<br />
D<br />
Superior<br />
Very strong<br />
Strong<br />
Satisfactory<br />
Weak<br />
Very weak<br />
Product providers that meet this criterion<br />
Overall Financial Strength<br />
Prudential<br />
A<br />
Aegon B+<br />
Canada Life B+<br />
Legal & General Investment Management B+<br />
Just B+<br />
LV= B+<br />
Retirement Advantage B+<br />
Royal London B+<br />
Scottish Widows B+<br />
Standard Life B+<br />
Vitality Life B+<br />
Wrap providers that meet this criterion<br />
Overall Financial Strength<br />
Standard Life Elevate<br />
A<br />
Standard Life Wrap<br />
A<br />
Aegon/ Cofunds B+<br />
Ascentric B+<br />
Aviva B+<br />
Hargreaves Lansdown B+<br />
Old Mutual Wealth B+<br />
SEI B+<br />
Transact B+<br />
Zurich B+
6<br />
Star Rating<br />
The provider’s product must have been awarded a Star Rating of ‘☆☆☆’ or higher by Defaqto.<br />
Why<br />
With so many financial products available, finding the right one can be challenging. It can also<br />
be difficult to understand the details and the differences between products, in amongst all the<br />
jargon and small print used in the documents and policies.<br />
Star Ratings award a provider’s product with a rating of 1 to 5 stars, based on its feature quality<br />
and comprehensiveness. A 1 Star Rating indicates a basic product, with a low level of features<br />
and benefits, while a 5 Star product provides one of the highest quality offerings in the market.<br />
Why Defaqto<br />
Defaqto are a leading independent organisation specialising in the provision of assessment,<br />
ratings, information and consultancy to the financial services industry.<br />
Defaqto have been producing Star Ratings since 2000 and uniquely, rate the products and<br />
propositions, not the providers. They apply a transparent, stringent and consistent methodology<br />
to ensure that Star Ratings continue to reflect industry, market, and consumer and adviser<br />
trends and developments.<br />
Based on an analysis of each product area, market developments or regulatory influences and<br />
open discussion with product providers – including annual roundtable meetings with open<br />
dialogue with providers, they select a set of features considered to be ‘core criteria’. These are<br />
areas where 4 and 5 Star rated products should offer a minimum level of benefit.
7<br />
Product providers that meet this criterion<br />
Aegon Retirement Choices<br />
FundsNetwork Pension<br />
Hubwise Personal Pension<br />
Parmenion SIPP<br />
Prudential Retirement Account<br />
Scottish Widows Retirement Account<br />
Standard Life Elevate Pension Investment Account<br />
Zurich Intermediary Platform Retirement Account<br />
Aegon One Retirement<br />
Aviva Pension Portfolio<br />
Fidelity SIPP<br />
Royal London Pension Portfolio<br />
Standard Life Active Money SIPP<br />
Standard Life Wrap SIPP<br />
Vitality Retirement Plan<br />
Aegon Cofunds Pension Account<br />
LV= Flexible Transitions Account<br />
Old Mutual Wealth Collective Retirement Account<br />
Transact Personal Pension<br />
Star Rating<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
Wrap providers that meet this criterion<br />
AJ Bell Investcentre<br />
Hubwise Securities Limited<br />
Novia Financial plc<br />
Nucleus Financial Group<br />
Parmenion Capital Partners LLP<br />
Seven Investment Management<br />
Standard Life Elevate<br />
Standard Life Wrap<br />
Tenet Platform<br />
Transact<br />
Zurich<br />
Ascentric<br />
Fundment<br />
James Hay Partnership<br />
Pershing<br />
Platform One<br />
Raymond James Investment Services<br />
Sinfonia Asset Management<br />
Wealthtime Limited<br />
Aegon/ Cofunds<br />
Amber Financial Investments Ltd<br />
Aviva<br />
Fidelity FundsNetwork<br />
Old Mutual Wealth<br />
Praemium<br />
Star Rating
8<br />
Service Rating<br />
The product provider must have been awarded a Service Rating of ‘Bronze’ or higher by<br />
Defaqto.<br />
Why<br />
Service standards are important for both consumers, and the employees of a product provider.<br />
They help to define what a customer can expect and to remind management and employees of<br />
the challenge and obligations that they face.<br />
For the consumer, monitoring or reviewing any products should be straightforward and simple,<br />
with the intention of easing the access to a product and reducing the amount of time and effort<br />
required to obtain the relevant information. In the case of any expectations, these should be<br />
quickly and satisfactorily resolved.<br />
Why Defaqto<br />
Defaqto are a leading independent organisation specialising in the provision of assessment,<br />
ratings, information and consultancy to the financial services industry.<br />
Defaqto’s service ratings provide a simple and unbiased assessment of a product provider’s<br />
service. They apply a transparent, stringent and consistent methodology to ensure that Service<br />
Ratings continue to reflect industry standards and developments.<br />
They gather data through service satisfaction surveys and provide a rating of Gold, Silver,<br />
Bronze or ‘no rating’, based on their overall satisfaction score.
9<br />
Product providers that meet this criterion<br />
Nucleus Financial Group<br />
Old Mutual Wealth Collective Retirement Account<br />
Parmenion Capital Partners<br />
Royal London Pension Portfolio<br />
Scottish Widows Retirement Account<br />
Standard Life Active Money SIPP<br />
Standard Life Elevate Pension Investment Account<br />
Standard Life Wrap SIPP<br />
Talbot and Muir<br />
Transact Personal Pension<br />
Wealthtime<br />
Zurich Intermediary Platform Retirement Account<br />
Zurich Retirement Account<br />
Prudential Retirement Account<br />
Aegon Retirement Choices<br />
FundsNetwork<br />
James Hay Wrap<br />
LV= Flexible Transitions Account<br />
Retirement Advantage<br />
Aegon Cofunds Pension Account<br />
Aegon One Retirement<br />
Aviva Pension Portfolio<br />
James Hay<br />
Defaqto Service Rating<br />
Gold<br />
Gold<br />
Gold<br />
Gold<br />
Gold<br />
Gold<br />
Gold<br />
Gold<br />
Gold<br />
Gold<br />
Gold<br />
Gold<br />
Gold<br />
Gold<br />
Silver<br />
Silver<br />
Silver<br />
Silver<br />
Silver<br />
Bronze<br />
Bronze<br />
Bronze<br />
Bronze<br />
Wrap providers that meet this criterion<br />
AJ Bell Investcentre<br />
Old Mutual Wealth<br />
Standard Life Elevate<br />
Standard Life Wrap<br />
Transact<br />
Wealthtime<br />
Zurich<br />
Fidelity FundsNetwork<br />
James Hay Wrap<br />
Nucleus Financial Group<br />
Aviva<br />
Aegon/ Cofunds<br />
Defaqto Service Rating<br />
Gold<br />
Gold<br />
Gold<br />
Gold<br />
Gold<br />
Gold<br />
Gold<br />
Silver<br />
Silver<br />
Silver<br />
Silver<br />
Bronze
10<br />
IDENTIFYING THE PRODUCT PROVIDERS THAT<br />
MEET OUR KEY CRITERIA<br />
The ‘Triple Factor’<br />
Leabold ‘Triple Factor’ requires that a product provider has to meet three key criteria standards<br />
in order to obtain a place on a panel of preferred product providers:<br />
Product providers that meet the ‘triple factor’:<br />
AKG Overall Financial Defaqto Star Defaqto<br />
Strength Rating<br />
Rating<br />
Service Rating<br />
Aegon One Retirement B+ Bronze<br />
Aviva Pension Portfolio B+ Bronze<br />
LV= Flexible Transitions Account B+ Silver<br />
Old Mutual Wealth Collective Retirement Account B+ Gold<br />
Prudential Retirement Account A Gold<br />
Royal London Pension Portfolio B+ Gold<br />
Scottish Widows Retirement Account B+ Gold<br />
Standard Life Active Money SIPP B+ Gold<br />
Standard Life Elevate Pension Investment Account A Gold<br />
Standard Life Wrap SIPP A Gold<br />
Zurich Platform Retirement Account B+ Gold<br />
Wrap providers that meet the ‘triple factor’:<br />
AKG Overall Financial<br />
Strength Rating<br />
Defaqto<br />
Star Rating<br />
Aegon/ Cofunds B+ Bronze<br />
Aviva B+ Silver<br />
Old Mutual Wealth B+ Gold<br />
Standard Life Elevate A Gold<br />
Standard Life Wrap A Gold<br />
Transact B+ Gold<br />
Zurich B+ Gold<br />
Defaqto<br />
Service Rating
11<br />
SUBSEQUENT CONSIDERATION<br />
Once a product provider has achieved a place on a panel of preferred product providers, we<br />
then undertake a further check:<br />
Image and Strategy Rating<br />
Why<br />
This rating is a measure of the organisation’s effectiveness in terms of the way they maintain<br />
and/or develop their position and image as a product provider. This rating considers the overall<br />
trends in the company’s market share position, brand visibility and reputation, feedback from<br />
intermediaries and industry commentators, and AKG’s view of the company’s general strategy.<br />
Why AKG<br />
AKG are a leading independent organisation specialising in the provision of assessment,<br />
ratings, information and consultancy to the financial services industry.<br />
Ratings applicable to product providers:<br />
Aegon One Retirement<br />
Aviva Pension Portfolio<br />
LV= Flexible Transitions Account<br />
Old Mutual Wealth Collective Retirement Account<br />
Prudential Retirement Account<br />
Royal London Pension Portfolio<br />
Scottish Widows Retirement Account<br />
Standard Life Active Money SIPP<br />
Standard Life Elevate Pension Investment Account<br />
Standard Life Wrap SIPP<br />
Zurich Platform Retirement Account<br />
AKG Image and Strategy<br />
Rating
12<br />
Ratings applicable to Wrap providers:<br />
Aegon/ Cofunds<br />
Aviva<br />
Old Mutual Wealth<br />
Standard Life Elevate<br />
Standard Life Wrap<br />
Transact<br />
Zurich<br />
AKG Image and<br />
Strategy Rating
13<br />
REVIEWING PRODUCT AND WRAP<br />
PROVIDERS AT PERIODIC INTERVALS TO<br />
ENSURE CRITERIA STANDARDS ARE MET<br />
Our diligence process will be undertaken at 3 monthly intervals. It will be undertaken by a<br />
person who is reasonably qualified by their ability, their appropriate knowledge, and their<br />
practical experience of financial matters. The person can, when they consider appropriate,<br />
consult Members of the Technical Committee for further guidance.
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