1. This document is for UK financial advisers only. It is not approved for use with private customers.
RDR – our FAQs
Retirement Income

2. RDR – our FAQs
Retirement Income
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Your questions around Annuities, Long Term Care and Drawdown answered.
Frequently Asked Questions – Annuities
How does RDR affect annuities?
The RDR will bring a radical change to the annuities
market in terms of remuneration for both selling and
transacting annuity business.
• Adviser charging will replace the current
commission-based model where annuities are
sold on an advised basis.
• Commission will only be payable if the annuity
is sold through non-advised services.
• Advisers will not be able to sell annuities with
any built-in commission on an advised basis.
Where advice is given, adviser remuneration will be
paid via a fee, based on an agreement between you
and your client. This can be paid to you directly by
your client, or deducted from the associated pension
pot (net of any tax-free cash).
How will adviser charging be paid
on annuities?
Friends Life will offer two types of facilitated
charging to advisers:
• Percentage of fund (%) – net of tax-free cash.
• Flat monetary amount (£).
It should be noted that facilitated adviser charging
will not be available for all Friends Life annuities
from 31 December 2012, and will be rolled out on
a phased basis. It will not be available for annuities
with guaranteed annuity options.
How do I sign up for adviser charging?
Our new facilitated fee options will be included in our
new Terms of Business which we will be publishing
on our adviser website later this year. If you already
have a set of Terms of Business with Friends Life you
don’t need to take any action other than to review
the new terms. The new terms will replace your
existing terms.
How do I get adviser charging on a
customer’s application for an annuity?
Friends Life is currently enhancing its annuity
propositions and ensuring that they are RDR
compliant. Facilitated adviser charging can only be
paid to an adviser on receipt of the appropriate
authority in writing from their client. Going forward
this authority will be part of the data captured in
the application process.
Can I still get commission on
‘execution only’ business?
RDR regulations continue to allow commission to
be paid on non-advised business, which is ordinarily
transacted through an intermediated guidance process.
In this scenario it is possible to offer a non-advised
service where only product information is given and
the adviser simply facilitates a customer’s decision.
For this Friends Life can pay commission to the
adviser in line with the RDR regulations provided
that it is fully disclosed to the customer.
The FSA have made it clear those customers who
choose this level of service must understand that
no advice is being offered to them.
It should be noted that the payment of commission
for non-advised services will not be available for all
Friends Life annuities from 31 December 2012.
Will you be updating your
documentation?
Yes. As part of the updating of our propositions and
ensuring that they are RDR-compliant, we will be
updating all the literature and documents which form
part of the retirement process.
Will you be closing any products to new
business as result of RDR?
No, we do not plan to close any annuity products in
light of the RDR.
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3. Frequently Asked Questions – Long Term Care
How does RDR affect long term care?
The RDR will bring changes in terms of remuneration
for selling our long term care business.
• Adviser charging will replace the current
commission-based model for selling long term
care on an advised basis.
• Advisers will not be able to sell non advised long
term care products with any built-in commission.
Where advice is given, adviser remuneration will be
paid via a fee, based on an agreement between you
and your client. This can be paid to you directly by
your client, or added to the long term care premium
in the form of an adviser charge, and then paid to
you by us.
When will adviser charging be
available for long term care sales?
With effect from 1 October 2012 Lifetime Care will
offer the choice of commission based sales or adviser
charging. The commission-based option will be
withdrawn on 28 December 2012.
Why are you offering adviser
charging early?
We are offering the option to use the facilitated
charging process early in response to feedback
received from financial advisers who are active
in this market.
How will adviser charging be applied
to long term care sales?
From 1 October 2012 Lifetime Care will offer
illustrations on a nil commission basis with the option
to add an advice charge to the premium as follows:
• Indicative illustrations will not include the
option to add an advice charge and will only
be produced on a nil commission basis.
• If we are asked to facilitate the advice charge,
the details, including the amount, will be clearly
shown on the offer terms letter.
• The advice charge can be a set amount or a
percentage of the single premium.
How do I sign up for adviser charging?
Our new facilitated fee options will be included in our
new Terms of Business which we will be publishing
on our adviser website later this year. If you already
have a set of Terms of Business with Friends Life you
don’t need to take any action other than to review
the new terms. The new terms will replace your
existing terms.
How do I get adviser charging on
a customer’s application for long
term care?
Adviser charging can only be paid to an adviser on
receipt of the appropriate authority in writing from
their client. Going forward this authority will be part
of the data captured in the application process.
Can I still get commission
on ‘execution only’ business?
RDR regulations continue to allow commission to
be paid on non-advised business, which is ordinarily
transacted through an intermediated guidance
process. However, this option is not available for long
term care products as we will only accept business
on an advised basis.
Will you be updating your
documentation?
Yes. As part of the updating of our propositions and
ensuring that they are RDR-compliant, we will be
updating all of the Lifetime Care literature and
documents.
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4. RDRFAQRI 07.12
Friends Life and Pensions Limited
Registered Office: Pixham End, Dorking, Surrey RH4 1QA
Incorporated company limited by shares and registered in England and Wales number 475201
Authorised and regulated by the Financial Services Authority
www.friendslife.com Telephone 0845 602 9189
Friends Life is a registered trade mark of the Friends Life group
Frequently Asked Questions – Drawdown
How does RDR affect our individual
Drawdown products?
It has always been necessary for Drawdown to be
an advised sale.
In line with FSA guidance, trail commission will
continue in most circumstances on our individual
Drawdown products for advice given before
31 December 2012. Trail commission will continue
on the pre-RDR investment amount.
No commission will be paid on new individual
Drawdown policies set up on or after 31 December
2012. Also no commission will be paid on additional
phases added to any policy on or after 31 December
2012 (even if the policy was set up prior to that date).
Will fee facilitation/adviser charging
be available?
Fee facilitation will continue to be available for
those individual Full SIPP Drawdowns under which
we currently offer the facility to pay adviser fees
from the SIPP bank account.
Fee facilitation will not be available on day one on
our other Individual Drawdown products (including
Deferred SIPP Drawdowns) for new policies, and
additional phases added to existing policies, on or after
31 December 2012. These customers will generally
receive the commission sacrifice terms applicable
before 31 December 2012 on their new policy or
additional phase. However in some circumstances
product terms may be re-priced. We will be publishing
information about any re-pricing on our dedicated
RDR pages at www.friendslife.co.uk/rdr, over the
coming months.
How will adviser charging work where
you aren’t offering facilitation?
Payment will need to be completed outside the
contract, directly between the customer and
adviser with no involvement from ourselves.
Will you extend the availability of
facilitated adviser charging in the future?
We will not facilitate adviser charging on individual
drawdown on day one, other than as mentioned
above. Our focus is on completing the mandatory
elements of RDR while keeping products open.
We are reviewing this on an ongoing basis and
we are looking to add adviser charging to groups
of products in 2013 depending on adviser and
customer demand.
Note: These individual Drawdown products are only
available to existing Friends Life pension customers.
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