Royal London has reported first half new life and pensions business up 45% year on year to over £6bn thanks to growth in several areas, including income drawdown, but has voiced concern about some aspects of income drawdown growth.

Individual pensions and drawdown new business sales at the mutual were up by 64% to £2,916m (30 June 2016: £1,783m) although group chief executive Phil Loney has expressed concern about the rapid rise in ‘non-advised’ income drawdown. He said he was pleased the FCA was looking at this area as he believes most consumers are better off taking advice. He warned that some providers may be ‘sleep walking’ their existing non-advised pension customers into in-house drawdown offerings.

Phil Loney, group chief executive of Royal London, said: “Recent FCA data confirmed a significant rise in Income Drawdown business across the market since the introduction of ‘Pension Freedoms’ in 2015.  The data revealed a particular surge in non-advised Drawdown sales; we think this is concerning as the best outcome for customers when choosing an income drawdown strategy generally occurs when they take financial advice, as the decisions are complex and can form a significant part of an individual’s retirement income. We are pleased that the FCA is looking at this area more closely, and our view is that they should do more to encourage individuals to take impartial financial advice when contemplating Income Drawdown.”

“We are also concerned that some providers may be “sleep-walking” their existing non-advised pension customers into their own in-house drawdown offerings, repeating some of the poor practice seen in the historic annuity market. Royal London intends to develop a better value for money drawdown offering and tools for those clients who insist on the non-advised route, but such competition will only be a viable solution if the FCA takes action to open this part of the market up to competition.”

Overall, the company saw strong new business performance in the first half of the year reflecting growth in the overall market size and significant success in its proposition, particularly the Drawdown Governance service.

Separately, following the triggering of Article 50 heralding the start of the Brexit process, Royal London has established a company domiciled in Ireland although it says this is primarily for its substantial Irish business.

Royal London says a focus on providing “value for money” following the FCA’s introduction of the early exit charge cap helped boost its pension business. Group Pensions new business sales were up by 32% to £2,527m although an expected reduction in workplace pensions means Group Pensions new business is expected to be lower in the second half of the year, says the company. Direct to consumer business, set up three years ago, was up 43% to £229m.

Royal London Asset Management saw gross inflows of £5.1bn (30 June 2016: £2.3bn) due to both Institutional and Wholesale markets.

The Royal London Platform Services reported gross inflows up 27% to £1.4bn (30 June 2016: £1.1bn), which maintained its market share. Royal London’s wrap platform saw assets under administration increase by 9% to £13.4bn (31 December 2016: £12.3bn). The business trades under the Ascentric brand and also provides white label platform services for larger advisory firms and other Royal London businesses.

In the first half of 2017 Ascentric launched a simplified pricing structure with a single charge across all wrappers and investment offerings, which makes it easier for advisers and their clients to understand total costs. Since the new pricing structure was introduced in May, Ascentric has seen a significant increase in Self-Invested Personal Pension (SIPP) accounts set up on the platform, it says.