PRINCIPAL RISKS AND UNCERTAINTIES.


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RISK

WHAT WE ARE DOING

RETAIL DISTRIBUTION REVIEW (RDR)

RDR will significantly change the way in which retail investment products will be sold and the relationships between advisers and the manufacturers of those products. We are required to make significant changes to our products and distribution processes. A successful transition to a post-RDR world requires execution of a large and complex project against a backdrop of late publication of the final rules. Leveraging business benefits in a post-RDR world will be a key challenge for the providers of investment products.

Delivery of an integrated operating model for a post-RDR environment is central to the Savings strategy. Our platform proposition and cost effective customer services will support advisers in adding value to their customers whilst maintaining profitability. We have made continuing investment in ensuring our business processes will comply with the new regulatory requirements and to help our customers and business partners transition to the new regime.

THE UK PENSION REVOLUTION

The UK Corporate Pensions market is in the midst of massive change. An area already impacted by major economic and demographic forces, will, in 2012, see the implementation of auto enrolment. Our Workplace Savings franchise is well positioned to respond to the evolving market. Significant changes that we have not anticipated may require us to review and realign elements of our business strategy.

We are delivering an integrated employer and employee solution that will position Legal & General as a leader in auto enrolment alongside a flexible savings platform. We have developed innovative solutions aligned to our customers’ needs to enable us to respond to evolving change.

WITH-PROFITS

The With-profits business faces challenges in the perception of its opacity and complexity, influencing a continuing decline in its significance in the savings market and uncertainty around the future regulatory regime.

We are focused on ensuring customers and intermediaries understand the role that With-profits products may play with investment portfolios. We continue to assess opportunities in With-profits products, investing where there is a clear customer appetite for the product.

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