XPS News | Administration Special

James Peel: Morning Ian, thank you for taking the time out this morning to discuss current administration market and what's happening as a result of COVID-19. It'd be great to cover a couple of things today. Firstly, your position in terms of where the market is and also what your view is in terms of the importance of good administration during COVID-19. So I guess yeah, let's start with that if we can.

Ian Bloxham: Morning James, thanks for inviting me along. I think generally we've been really impressed with the administrator response to lockdown across the TPA market. I think the TPA market and the in house market probably had different challenges but certainly from a TPA perspective, you know, mobilization seem to happen pretty quickly and it's clear there's been a huge amount of effort going in to enable pretty extensive homeworking. In fact, I think a number of firms have got almost complete homeworking in place and that seemed to happen certainly from our perspective anyway, pretty seamlessly, although you'll probably know better than me behind the scenes, I'm sure there are a lot of long evenings and maybe even weekends to make that happen. But generally, as a rule of thumb, I think we should be proud of the industry response to dealing with this and how trustees and more importantly, members have been supported throughout and I think clearly there have been some prioritization and some firms have had challenges that maybe don't apply to others. For example offshoring we know has been a real issue or a real challenge for those firms that have extensive use of offshore resources as part of their delivery model.

I think the challenges have been different for the in house market in the sense they generally have a more all-in-one solution. The team does everything from soup to nuts, and maybe they don't always have the infrastructure in place to enable seamless homeworking. So I think we've seen a combination of solutions in the in-house market and I do think at the end of this, there'll probably be a reappraisal of the risks from an in-house perspective, how homeworking has operated and what challenges that may persist in the future.

James: Early in March, I think across the business we did see a spike in work actually in member queries. It was quite a sector specific. I think some of our financial firms, I think they were very interested in the market and indeed they were asking for various things like quotations, et cetera, et cetera, and also for some of our DC work as well. We did certainly see a spike in queries and indeed member switches. So I guess there were lots of members who were concerned about the market movements and were trying to make an active decision around where their investments were going to be made.

I think over the last two or three weeks we have started to see a slight reduction in member queries, which is good. So hopefully there is some more certainty around the market and indeed how members are feeling about COVID-19. I think we've done pretty well with our operating model with the fact that we believe in not offshoring in our work. We think that's the best model for administration, pension administration anyway. It's enabled us to react very quickly. As I mentioned earlier, we've been able to pick up phone calls remotely, very simply. And I think just by having that there in place very quickly, it's meant that members haven't really seen any real impact in terms of being able to communicate that and I think that's been really important during what has been for everybody a very challenging period.

I think comm support has been required more on our DC side of the business, I think possibly because of the financial impacts that COVID-19 has had on members' fund values and indeed pots as they approach their retirement ages. So we have had multiple requests, so we've worked with those clients to develop communications to issue to members, obviously making them as clear and concise as possible. We have also used websites which we provide for clients to host information relating to COVID-19. So, for example, the letter that we would send to members might actually be a very basic but actually it will point them to XPS Bridge which is one of our platforms which will enable members to access information about COVID-19 and indeed how that might have affected their benefits. Again, other clients are concerned that by writing to several thousand members potentially it might generate a lot of calls into the admin team which indeed we have seen an impact on that. But what we've been saying to clients is it's very important that we communicate with members if you feel that they need to know about this information and we would absolutely support that and we'll worry about how we manage the calls back in the office. So it very much depends on the clients. But yeah, we've certainly been helping clients navigate their way through this process.

Ian: I think again from a market perspective, we're actually seeing quite a lot of data being produced by providers and even the in house teams to demonstrate, I suppose demonstrate a few things. One would be that they've got their arms around this quite clearly, which from a trustee and sponsor perspective is reassuring, but also to try and track the nature of that demand and how it's changing which helps in terms of prioritization and forward planning. So again it's been encouraging how quickly we seem to have slipped into a routine of weekly updates from providers around how demand has changed.

James: I'd absolutely agree with that. I mean there's certain things that we've probably talked about internally that we thought would be quite nice haves, but now we have them because things like reporting is essentially important, so we have daily updates across the whole of our business in terms of where we're at with projects, SLAs et cetera, which is visible at a very senior level. So that gives a very good overview of where we are at and how we are delivering service. So just to have that has been great but there's loads of other things that we've been able to push forward which will no doubt kind of now stay with us as we move forward after COVID-19 eventually leaves us behind.

Ian: Clients will probably, and certainly our view is clients will probably want a bit of a refresh on what the delivery model looks like at the end of all this. They're probably very familiar with how it used to be. There's probably going to be a requirement, I think at some stage to say this is where we've got to and I suppose your own delivery model will evolve as a result of this and I think our view is that needs to be designed rather than happen through as a result of this. Your points well made. We had people in offices for a reason. Those reasons haven't gone away, although maybe there are areas where homeworking is more appropriate in the future. So I think that update, refresh, review of the delivery model from a client perspective and from a provider perspective is going to be interesting at the right time.

James: XPS Group has been working very closely together and where we perhaps do have additional resource in certain pockets of the business, we have been utilizing those and they've been shared out. So that's worked really well. And again, I think that just comes down from very good leadership from the top and it's just filtered down. So yeah, it's great to see because in some areas where we are busier, that additional support is very much welcomed by the employees, in those areas.

We are certainly seeing prospective clients and procurement companies contacting us. So things are certainly moving forward. I think we've perhaps seen one or two cases where processes have been paused. However, what we are saying, and we would urge employers, sponsors and indeed trustees, is that if we do pause on your process, there might well be 6 to 9-12 months, a capacity issue in the market. We are operating very much as BAU, as I've already mentioned and I think that we are fully equipped to continue to deliver on a transition. And so on that basis I think we would be keen to still work with clients and indeed urge them to continue with their processes that they may have already instigated.

Thanks Ian; it's been great to speak to you this morning and certainly virtual has worked exceptionally well. I think the things I'm going to take away from this is that I think in terms of new business and sponsoring employers and indeed trustees, if they do have a process in place, I think they should continue with that process. It would certainly be advantageous, particularly in light of a potential capacity problem at 9/12 months and beyond into the future. I think some of those things that we've adopted, those processes, I'm sure will stay with us now into the future. And again, I think there's lots of things to think about in terms of how we manage admin firms in the future. And indeed, a lot of that will require a certain amount of additional thought, but it's certainly given us something to think about.