STRATEGIC REPORT
39
STRATEGIC OBJECTIVES
RISK OUTLOOK
1.
2.
3.
4.
5. Be Proud To Work At Just
No Change/Stable Increasing Decreasing
Improve Our Capital Position
Transform How We Work
Get Closer To Our Customers & Partners
Generate Growth In New Markets
DESCRIPTION AND IMPACT
MITIGATION AND MANAGEMENT ACTION
RISK
The Group operates in a market where changes in pensions legislation can have a considerable effect on our strategy and could reduce our sales and profitability or require us to hold more capital. Customers’ need for a secure income in retirement continues and the Group expects that demand for guaranteed income for life solutions will continue. The availability to insurers of defined benefit de-risking transactions is expected to continue to grow. The equity release market has been dominated by a limited number of specialist providers, but new entrants – both providers and funders – have emerged along with new product launches and the intensity of competition has increased. The equity release asset class provides good cash flow matching for the Group’s longer duration DB de-risking and GIfL liabilities, where suitable longer duration corporate or government bonds or other appropriate assets are less readily available. Customer needs and expectations continue to evolve and change in profile, and there is a risk that we fail to customise and tailor our professional services and distribution models to suit their specific requirements. Poor management of customer or distributor relationships as well as misleading customers or misrepresenting products to customers are also risks which could lead to regulatory censure as well as loss of customers. Our purpose is to help people achieve a better later life. Our Group’s brands reflect the way we intend to conduct our business and treat our customer and wider stakeholder groups. The Group’s reputation could be damaged if the Group is perceived to be acting, even unintentionally, below the standards we set for ourselves. Damage to our reputation may adversely affect our underlying profitability, through reducing sales volumes, restricting access to distribution channels and attracting increased regulatory scrutiny. Additionally, the Group’s reputation could be threatened by external risks such as regulatory intervention or enforcement action, either directly or as a result of contagion from other companies in the sectors in which we operate.
Our approach to legislative change is to participate actively and engage with policymakers. The Group offers a range of retirement options, allowing it to remain agile in this changing environment, and has flexed its offerings in response to market dynamics. We believe we are well placed to adapt to changing customer demand, supported by our brand promise, innovation credentials and financial strength. The most influential factors in the successful delivery of the Group’s plans are closely monitored to help inform the business. The factors include market forecasts and market share, supported by insights into customer and competitor behaviour. Work continues to improve the customer appeal of the Group’s equity release products, explore new product variants and meet distributors’ digital and service needs. We continue to gather customer insight and enhance our distribution services accordingly. In 2019 we have expanded the portfolio of partners for whom we provide GIfL broking services as well as including comparisons with closed book rates where life company partners offer these. Recognising the increased demands for advice from members of defined benefit pension schemes, our defined benefit member options business purchased last year has continued its safe growth in a highly regulated environment. We have developed and plan to launch in 2020 a pioneering and exciting fully advised online financial planning service targeted at people close to or in-retirement with modest pension savings. The service will provide the opportunity to receive tailor-made regulated financial advice without paying the costs associated with a traditional financial adviser. The Group actively seeks to differentiate its business from competitors by investing in brand-enhancing activities. Fairness to customers and high service standards are at the heart of the Just brand, and we encourage our colleagues to take pride in the quality of service they provide to our customers. Engaging our colleagues in the Just brand and its associated values has been, and remains, a critical part of our internal activity. The Group maintains a system of internal control, and associated policies and operational procedures, which define the standards we expect of all colleagues.
RISK E RISKS FROM OUR CHOSEN MARKET ENVIRONMENT
Strategic objective
1. 2. 3. 4. 5.
Change in the year
Risk outlook
RISK F RISKS TO THE
GROUP’S BRAND AND REPUTATION
Strategic objective
1. 2. 3. 4. 5.
Change in the year
Risk outlook
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