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Categories:Advisers

Friends Life makes extra annuity payment after direct deal 'mistake'

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Friends Life has agreed to make an extra annual payment to an annuitant after an adviser complained that the provider had contacted the client directly and sold them an annuity lower than they could have gained from shopping around.

As a result, Friends has agreed to pay the £575 per year difference between the pension scheme offered to one of his clients and the rate the client could have received through the Open Market Option.

In April, 2011, Friends Provident sent a letter to a client of Ward House principal Michael Ward informing them of an enhanced annuity option provided by Partnership.

The client was part of a Friends Provident Group Pension scheme which was serviced by Ward House.

Partnership advised it was not able to offer an enhanced or impaired annuity because the client was in good health and as a result the client took pension benefits with Friends.

The client had a pension pot of £63,104.42 and through the annuity offered by Friends begun receiving a gross annual payment of £3,128 from their retirement date in June.

Ward then contacted Friends informing them that through the OMO, the client could have received a further £575.40 per year.

Following involvement from both the adviser’s compliance provider Bankhall and his local MP Andrew Turner, Friends agreed to increase the client’s pension by the amount they had been disadvantaged.

A letter was also sent to Ward confirming that Friends would be making a payment to his firm of £526.67 which reflected the amount of commission his firm would have received on purchase of the annuity.

Friends says the direct contact was a mistake and that the pilot scheme with Partnership was only supposed to apply to orphan clients.

Ward says: “It is not right that life companies contact clients directly and offer them deals like this because the client does not understand and firm’s are taking advantage of that. The case in point is clearly one which required advice.”

Ward has also expressed concern that Friends has contacted another of his clients in the same way.

A Friends Life spokesman says: “Friends Life is running a pilot under which customers approaching retirement can be referred to Partnership for the option of taking out an enhanced annuity if it is likely that they will be eligible for this type of annuity.

“We are aware of a specific case where we failed to send some of this information to an adviser at the same time that we sent it to the customer. In this case, as a gesture of goodwill, we made a payment to the adviser to reflect the commission that would have otherwise been paid. This was an error as our normal practice is to send information to the adviser at the same time as the customer.”

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Readers' comments (9)

  • "Friends says the direct contact was a mistake and that the pilot scheme with Partnership was only supposed to apply to orphan clients."

    AS IF!

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  • Not unlike Stadard Life's assault on IFA clients, trying to orphan clients for their own benefit.

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  • I ceased doing business with the above two providers when they started their assaults on MY clients.

    There are much better companies out there who 'care' about the IFA.

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  • I think they should be reported to Rogue Traders.

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  • I had a standard life offer a partnershi enhanced annuity less than what partnership offer my client through me they are playing a game

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  • These companies make a mockery of RDR because they are big enough to "try things on" like this.
    They are in a strong position, we, as small IFA's however are lambs to the slaughter as we lack the financial clout, disgusting it may be but do they care? I doubt it.

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  • Standard Life have a tie up with Partnership and are able to get a much higher annuity rate from them than we are.

    I've stopped using both companies.

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  • Only today we received a copy letter to one of our clients close to retirement. The copy took 5 days to reach us, by which time our client (who received the original much earlier) could have signed the forms and sent them back.

    The letter made no reference to us at all.

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  • Only a fortnight ago Friends wrote to one of my clients offerring them an enhanced annuity from Partnership if they simply completed some medical detials. Beware IFAs the gloves are off.

    Friends (I suspect the whole Resolution group) see our clients as fair game - and do not even have the decency to offer a range of possible solutions to those clients unfortunate to follow this none advised tied sales route - for which Friends openly declare they will be paid a handsome commission! Friends always said they received the vast majority of thier business through IFAs - now though they are happy to bite the hand that fed them.
    Another business that will be very hard pressed to justify any future business from our practice.

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