Increased customer service costs could affect pension values

According to Transversal (, the pensions industry is facing a customer service bill of nearly £100 million to answer questions from IFAs and pension customers about the Government's new Pensions Simplification Initiative. The regulations, which affect all 14.3 million private UK pension holders , come into force on A Day (6 April 2006). As the most significant overhaul of the industry for a century, customer queries are set to increase exponentially from concerned pension holders wanting to know how the changes will affect them.

If the average cost of handling a single, straightforward query via email is around £6.50 , and each pension holder asked just one question in this way, it would push the industry's costs up by £93 million. However, pension queries are likely to be more complex and take longer to handle, potentially increasing these costs by a factor of two or three, making the total bill closer to £300 million. The industry could also face increased costs for recruiting and training up to 1,000 more customer service staff, if it doesn't invest in more effective and efficient ways of responding to pension holder concern. The net effect of increased customer service costs could damage pension values through reduced profits.

Following recent scandals over pension values and contracted-out pensions, the public is also likely to be distrustful of advice given by providers and IFAs. The Financial Services Authority (FSA) has put in place measures to safeguard consumers such as the Treating Customers Fairly initiative. The pensions industry therefore needs to be certain that it is delivering consistent, accurate information in order to reduce the risk of mis-selling and future litigation - and improve its public image.

Some pension providers are using the immediacy and accessibility of the internet to ensure their customers, IFAs and staff all have access to the same, consistent information, from centralised online helpdesks. Standard Life has adopted this approach by implementing Transversal's new IFA Answers eService helpdesk to enable its 40,000 registered advisers to provide company-approved answers to its two million customers. Built on a self-organising, self-learning knowledgebase, advisers simply log-in and enter their question, and by using its human language understanding, IFA Answers provides an accurate, on-the-spot answer.

By removing the need to make a phone call or send an email, Standard Life will be able to manage a significantly higher number of customer service queries, without increasing costs or headcount. IFA Answers has been proven to reduce contact volumes by around 40 per cent and inbound emails by around 60 per cent.

"Pensions Simplification could cost the industry millions just to answer basic queries," commented Davin Yap, ceo and co-founder, Transversal. "Pension companies need to act now to reduce customer anxiety, potentially damaging misinformation, and to avoid their contact centres being swamped by queries as the A Day deadline approaches."

IFA Answers' dynamic knowledgebase is populated organically, with replies to new questions becoming part of a constantly evolving information source. A simple, automated email workflow is used for creating, approving and submitting answers to the knowledgebase. Likewise, content approvers use a simple two-click function to publish new content, which automatically relates and prioritises itself with other information in the knowledgebase. IFA Answers includes an email quarantine feature which protects against potential legal cases by automatically diverting emails containing contentious language such as 'we advise/we recommend' to managers.

Dee Roche, Head of Marketing +44 (0)1223 723 388 Rainier PR Chris Measures/Elke Panzner +44 (0)20 7494 6570

About Transversal
Transversal, founded in 1998 by top researchers from Caltech and Cambridge universities, is a Cambridge-based developer of intelligent eCustomer service software that enables organisations to achieve key sales, customer service and efficiency goals. Transversal's flagship service, Metafaq, enables organisations to increase online sales and reduce the volume of call and email queries to contact centres by automatically answering customers' questions online. Transversal customers will typically see immediate and dramatic email reductions, by around 60%, and improvements in email response times, from days to minutes. Intrafaq, Transversal's knowledge management solution for contact centres, delivers information to agents in a unique way from a dynamic natural language knowledgebase. Simply by typing a question, in their own words, agents can access answers to customer questions; providing fast, accurate and consistent responses. Organisations benefit from increased first call resolution and efficiency by improving the knowledge and quality of service provided by customer service and help-desk agents. Transversal's Memory Engine(tm) is the result of research and development by top researchers in Information Theory and Machine Learning from Caltech and Cambridge universities. Transversal co-founder, Prof. David MacKay, is a world renowned expert in Artificial Intelligence. He pioneered Bayesian Neural Networks in the late 1980s and remains at the forefront of the field. Current customers include Sony, Direct Line, Thomsons, MFI, Barclays, Nissan, Fujifilm, Standard Life, TUI, Metropolitan Police, Proctor & Gamble, Triton

Published on: 12:00AM on 8th November 2005