WHITBREAD’S outgoing chief executive has accused the pensions industry of confusing customers with “snake-oil salesmen” and “middle-men fees”.
Andy Harrison told the industry’s annual conference in Manchester last week that it had forgotten about its customers. “Pensions have always been hard for people to understand, but the trust in pensions is probably the lowest it has been in my lifetime,” he said.
Harrison criticised firms for their use of jargon and hefty administration fees, which had “disillusioned” savers. His FTSE 100 leisure giant, which owns the Premier Inn and Costa Coffee brands, closed its final salary pension scheme to new members in 2009, and has 20,000 workers in a defined-contribution scheme.
The usually understated 58-year-old was making one of his last public appearances before stepping down at Whitbread after five years at the helm. He will be replaced by Alison Brittain, head of the retail division at Lloyds bank, who will start in January.
Harrison said he was impressed with the government initiative to enrol employees into pensions automatically, but struck a sceptical note over what those pots might be worth in a decade.
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“That’s down to you as an industry to deliver value for money for consumers. What I worry about is that as those tens of thousands of people move from company to company, those small pots are going to be eroded by admin costs, transfer charges and fees.”
Plans to smooth this process with a “pot follows member” system — where a worker’s pension moves with them to their next job whenever they leave a company — were put on the back burner by the government last week.
The chief executive prefaced his talk at the National Association of Pension Funds conference with the statement: “The financial services industry suffers from more than its fair share of snake-oil salesmen.”
Harrison then told the conference — where almost 100 companies were advertising their pension services to delegates — that he found it “quite hard to find simple, powerful customer propositions”. To ripples of displeasure, he asked: “Where is the voice of the end user — the consumer — in the room?”
Whitbread employs 45,000 staff, mostly at Costa and Premier Inn, which have both been massively expanded under the departing boss. That growth has coincided with a surge in Whitbread’s share price, from about £15 when Harrison took over, to £46 now.
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The winning streak looks set to continue. In his final results, he will this week unveil a 13% rise in first-half profit to £289m.
Some analysts have speculated that Brittain will look to spin off Costa when she begins her tenure.