Provider Due Diligence July 2023
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PRODUCT PROVIDER<br />
DUE DILIGENCE<br />
JUL <strong>2023</strong>
2<br />
TABLE OF CONTENTS<br />
OUR DUE DILIGENCE PROCESS ____________________________________________ 3<br />
SETTING OUT THE KEY CRITERIA ___________________________________________ 4<br />
The ‘Penta Factor’ ________________________________________________________ 4<br />
Overall Financial Strength Rating ____________________________________________ 5<br />
Why AKG _____________________________________________________________________ 5<br />
Why this particular rating _________________________________________________________ 5<br />
Product providers that meet this criterion ____________________________________________ 6<br />
Platform providers that meet this criterion ____________________________________________ 6<br />
Business Performance Rating _______________________________________________ 7<br />
Why AKG _____________________________________________________________________ 7<br />
Why this particular rating _________________________________________________________ 7<br />
Product providers that meet this criterion ____________________________________________ 8<br />
Platform providers that meet this criterion ____________________________________________ 8<br />
Image and Strategy Rating _________________________________________________ 9<br />
Why AKG _____________________________________________________________________ 9<br />
Why this particular rating _________________________________________________________ 9<br />
Product providers that meet this criterion ___________________________________________ 10<br />
Platform providers that meet this criterion ___________________________________________ 11<br />
Star Rating ____________________________________________________________ 12<br />
Why Defaqto __________________________________________________________________ 12<br />
Why this particular rating ________________________________________________________ 12<br />
Product providers that meet this criterion ___________________________________________ 13<br />
Platform providers that meet this criterion ___________________________________________ 14<br />
Service Rating __________________________________________________________ 15<br />
Why Defaqto __________________________________________________________________ 15<br />
Why this particular rating ________________________________________________________ 15<br />
Product providers that meet this criterion ___________________________________________ 16<br />
Platform providers that meet this criterion ___________________________________________ 16<br />
IDENTIFYING THE PRODUCT PROVIDERS THAT MEET OUR KEY CRITERIA _______ 17<br />
The ‘Penta Factor’ _______________________________________________________ 17<br />
Product providers that meet the ‘Penta factor’: _______________________________________ 17<br />
Platform providers that meet the ‘Penta factor’: _______________________________________ 18<br />
REVIEWING AT PERIODIC INTERVALS ___________________________________ 19
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 ‘Penta Factor’<br />
Leabold operates its due diligence process under the ‘Penta Factor’. This means that a product<br />
provider must meet five key criteria standards in order to obtain a place on our panel of<br />
preferred product providers.
5<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 AKG<br />
AKG are a leading independent organisation specialising in the provision of assessment,<br />
ratings, information and consultancy to the financial services industry for over 20 years.<br />
Why this particular rating<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 is similarly important<br />
to enable the provider to maintain and develop critical systems and may also reduce pressure<br />
to increase charges to customers in the event of adverse economic or trading conditions.<br />
We believe that financial strength is also important because, from the customer’s perspective,<br />
it is the product provider (not some higher corporate entity) that needs to survive in a form that<br />
maintains the operational characteristics required to meet their individual needs.<br />
Their Overall Financial Strength rating system considers the following criteria that 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
6<br />
Product providers that meet this criterion<br />
Overall Financial Strength<br />
Prudential<br />
A<br />
Scottish Widows<br />
A<br />
Aegon B+<br />
AIG B+<br />
Aviva B+<br />
BlackRock B+<br />
Canada Life B+<br />
Hargreaves Lansdown B+<br />
Just B+<br />
Legal & General B+<br />
Legal & General Investment Management B+<br />
Quilter B+<br />
Rothesay B+<br />
Royal London B+<br />
Standard Life B+<br />
Abrdn Elevate B+<br />
Vitality B+<br />
Zurich B+<br />
Platform providers that meet this criterion<br />
Overall Financial Strength<br />
Abrdn Elevate<br />
A<br />
Abrdn Wrap<br />
A<br />
Aegon Platform B+<br />
AJ Bell Investcentre B+<br />
Aviva Platform B+<br />
Embark Platform B+<br />
Hargreaves Lansdown B+<br />
M&G Wealth Platform B+<br />
Quilter Investment Platform B+<br />
SEI B+<br />
Transact B+
7<br />
Business Performance Rating<br />
The product provider must have been awarded a Business Performance rating of ‘’ or<br />
higher by AKG.<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 for over 20 years.<br />
Why this particular rating<br />
This review is an assessment of how the company and the brand has fared against its peers,<br />
and how it is perceived externally. Effectively this is how it has performed recently in the market.<br />
Whilst it will include performance indicators from the most recent available statutory reporting<br />
(report and accounts and SFCRs in the case of insurance companies, for example) it will also<br />
draw on other recent key performance elements before and after such disclosure, up to the<br />
point at which the assessment is undertaken.
8<br />
Product providers that meet this criterion<br />
Curtis Banks<br />
InvestAcc<br />
Royal London<br />
Standard Life<br />
AIG<br />
B&CE<br />
Barnett Waddingham<br />
British Friendly<br />
Canada Life<br />
Dentists' Provident<br />
Embark Pension<br />
Guardian<br />
Just<br />
LV=<br />
Prudential<br />
Quilter<br />
Rothesay<br />
Scottish Friendly<br />
Scottish Widows<br />
Vitality<br />
Zurich<br />
Shepherds Friendly<br />
Business Performance rating<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
Platform providers that meet this criterion<br />
Abrdn Wrap<br />
Aviva Platform<br />
Embark Platform<br />
Novia<br />
Parmenion<br />
Quilter<br />
Seven Investment Management<br />
Abrdn Elevate<br />
M&G Wealth Platform<br />
Business Performance rating
9<br />
Image and Strategy Rating<br />
The product provider must have been awarded an Image and Strategy Rating of ‘’ or<br />
higher by AKG.<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 for over 20 years.<br />
Why this particular rating<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.
10<br />
Product providers that meet this criterion<br />
Image and Strategy rating<br />
Canada Life<br />
Royal London<br />
Scottish Widows<br />
AIG<br />
B&CE<br />
Barnett Waddingham<br />
Curtis Banks<br />
Dentists' Provident<br />
Embark Pensions<br />
Guardian<br />
InvestAcc<br />
Just<br />
Prudential<br />
Quilter<br />
Rothesay<br />
Scottish Friendly<br />
Standard Life<br />
Vitality<br />
Zurich<br />
British Friendly<br />
LV=<br />
Shepherds Friendly
11<br />
Platform providers that meet this criterion<br />
Image and Strategy rating<br />
Aviva Platform<br />
Advance by Embark<br />
M&G Wealth Platform<br />
Novia<br />
Parmenion<br />
Quilter<br />
Seven Investment Management<br />
Abrdn Elevate<br />
Abrdn Wrap
12<br />
Star Rating<br />
The provider’s product must have been awarded a Star Rating of ‘☆☆☆’ or higher by Defaqto.<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 />
Why this particular rating<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 />
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 />
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 />
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.
13<br />
Product providers that meet this criterion<br />
Star Rating<br />
Aegon One Retirement<br />
AEGON Retirement Choices SIPP<br />
AJ Bell Investcentre Retirement Investment Acc<br />
Aviva Pension Portfolio<br />
Canada Life Retirement Account<br />
Fidelity Adviser Solutions<br />
Fundment Personal Pension<br />
Parmenion SIPP<br />
Quilter Collective Retirement<br />
Royal London Pension Portfolio<br />
Scottish Widows Retirement Account<br />
Standard Life Active Money Personal Pension<br />
Standard Life Active Money SIPP<br />
Abrdn Elevate Pension<br />
True Potential Investments (Pension)<br />
Aegon Platform SIPP<br />
Aviva Life & Pensions UK Limited<br />
Hubwise Personal Pension<br />
Morningstar Wealth Retirement Services<br />
Nucleus Pension Account<br />
Prudential Retirement Account<br />
Transact Personal Pension<br />
Aegon Cofunds Pension Account<br />
Embark Platform Personal Pension<br />
Fidelity SIPP<br />
LV= Flexible Transitions Account<br />
Penfold Pension<br />
Seven Investment Management (7IM)<br />
True Potential Investments<br />
True Potential Investor
14<br />
Platform providers that meet this criterion<br />
Star Rating<br />
abrdn Wrap<br />
abrdn Elevate<br />
Advance By Embark Platform<br />
Aegon Retirement Choices (ARC)<br />
Embark Platform<br />
Fidelity Adviser Solutions<br />
Fusion Wealth Platform<br />
M&G Wealth Platform<br />
Morningstar Wealth Platform<br />
Novia Wealth Management Service<br />
Nucleus Financial Services Limited<br />
Quilter Investment Platform<br />
Transact<br />
Wealthtime Platform<br />
7IM Platform<br />
AJ Bell Investcentre<br />
Fundment<br />
Hubwise Platform<br />
James Hay Wrap<br />
Parmenion Capital Partners<br />
Platform One<br />
True Potential Investments<br />
Aegon Platform SIPP<br />
Aviva<br />
James Brearley<br />
P1 Platform
15<br />
Service Rating<br />
The product provider must have been awarded a Service Rating of ‘Bronze’ or higher by<br />
Defaqto.<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 />
Why this particular rating<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 />
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.
16<br />
Product providers that meet this criterion<br />
Advance by Embark<br />
Aegon<br />
AJ Bell<br />
Aviva<br />
Abrdn Elevate<br />
Fidelity FundsNetwork<br />
LV=<br />
Novia Financial<br />
Nucleus Financial Group<br />
Parmenion Capital Partners<br />
Prudential<br />
Quilter<br />
Royal London<br />
Scottish Widows<br />
Standard Life Assurance<br />
Transact<br />
Vitality<br />
Wealthtime<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 />
Gold<br />
Gold<br />
Gold<br />
Gold<br />
Platform providers that meet this criterion<br />
Advance by Embark<br />
Aegon Retirement Choices (ARC)<br />
AJ Bell Investcentre<br />
Aviva<br />
Abrdn Elevate<br />
Fidelity FundsNetwork<br />
Novia Financial<br />
Nucleus Financial Group<br />
Parmenion Capital Partners<br />
Quilter<br />
Seven Investment Management (7IM)<br />
Abrdn Wrap<br />
Transact<br />
True Potential<br />
Wealthtime<br />
Ascentric<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 />
Gold<br />
Silver
17<br />
IDENTIFYING THE PRODUCT PROVIDERS THAT<br />
MEET OUR KEY CRITERIA<br />
The ‘Penta Factor’<br />
Leabold ‘Penta Factor’ requires that a product provider must meet five key criteria standards in<br />
order to obtain a place on a panel of preferred product providers:<br />
Product providers that meet the ‘Penta factor’:<br />
AKG Overall<br />
Financial<br />
Strength Rating<br />
AKG Business<br />
Performance<br />
Rating<br />
AKG Image<br />
& Strategy<br />
Rating<br />
Defaqto Star<br />
Rating<br />
Defaqto<br />
Service Rating<br />
Prudential A Gold<br />
Quilter B+ Gold<br />
Royal London B+ Gold<br />
Scottish Widows A Gold<br />
Standard Life B+ Gold
18<br />
Platform providers that meet the ‘Penta factor’:<br />
AKG Overall<br />
Financial<br />
Strength Rating<br />
AKG Business<br />
Performance<br />
Rating<br />
AKG Image<br />
& Strategy<br />
Rating<br />
Defaqto Star<br />
Rating<br />
Defaqto<br />
Service Rating<br />
Aviva Platform B+ Gold<br />
Quilter Platform B+ Gold<br />
Abrdn Elevate Platform A Gold<br />
Abrdn Wrap Platform A Gold<br />
Advance by Embark Platform B+ Gold
19<br />
REVIEWING AT PERIODIC INTERVALS<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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