Click says it owes Fortis £900k in clawback
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Non-advised protection firm Click says it owes Fortis £900,000 in clawback after commencing a payment plan to repay £1.2m of indemnity commission on lapsed policies.
Click joint managing director Ray Flannery says the payment plan has been in place for about six months.
Flannery says: “Cash is tight. It is a difficult market but we are not about to go under. There is a payment plan in place, we are paying that payment plan. It came from clawbacks which we were not expecting to get, which we did get from Fortis.”
Master Adviser IFA Roy McLoughlin says: “I would be concerned if an unacceptable persistency rate was occurring with what is, after all, a very valuable product.”
A Fortis spokesperson says: “We have notified the FSA of a Click debt. We have a repayment plan, which Click is following. This does not impact our ongoing business in any way.”
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Readers' comments (16)
Anonymous | 13 May 2010 9:56 am
I knew there was something wrong with the way Click operate you can't have a call centre staff operate and do a proper factfind on things like life insurance, Click mass produce and have made it difficult for the "real advisers" to get business I even get emails from them trying to sell me a life policy that costs under £3, well we know the saying what goes round comes around. they should go back to do doing loans and leave the Protection market to the Real Advisers! sorry to nag but Click realy get on my nerves!
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Anonymous | 13 May 2010 11:00 am
When a company tries to convice a customer to replace their Life & CIC with a life and terminal illness cover plan to save them money what do you expect. If you think about how much commision was sacrificed in the first place to win the business for them. I dread to think about the number of customers in that £900k claw.
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Anonymous | 13 May 2010 11:46 am
The number of clients who come back to us having been lured to Click with "better cover" but actually end up with inferior cover poorly sold doesn't surprised me. Apparently they are non-advised, but they often "advise" a client to do something in a certain way just to get the cover cheaper. It couldn't happen to a "nicer" firm!
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Anonymous | 13 May 2010 11:52 am
This is what happens when your business model is to secure as much business as possible based on cost rather than giving proper sound advice. Long term, this type of business will almost always fall short at some point. And they didn't think this was going to happen?...
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Anonymous | 13 May 2010 1:32 pm
Always find it amazing that anyone believes that advice from a poorly qualified 'basic' IFA is worth anything at all. Most mis-selling scandals over the past 30 years have come from sales where a customer has been 'advised' to take poor value high commission products. Of course, I take my hat off to those IFAs that bother to get properly qualified and charge for decent advice - hopefully the RDR will sort all this out.
Aside from that, sorry but this just sounds like sour grapes that someone is giving the customer a better deal than they can!
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Ray Flannery | 13 May 2010 2:51 pm
Thanks you for your support in what are difficult times for everyone in our industry!!! I tend to agree with the last contributor. Sour Grapes
Obviously, we are supporters of the net but I do find it annoying that 'anonymous' people make totally untrue and unfounded statements as above. Have the decency to put your name so that you can be accountable for your comments or don't make them. These sort of slurs do not help the image of our industry
Just to set the record straight - This is not really news. The lapses occurred over 6 months ago and there is an agreed payment plan to deal with them. Further, to put this into perspective, Click writes £120,000 commission a day so the debt is 8 days of income. So sorry to spoil your glee but this is not really an issue for Click
Let spend our time more productively - addressing the protection gap. There is a role for all types of distributor
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Anonymous | 13 May 2010 4:29 pm
Addressing the protection gap IS a real concern. You are absolutely right there Ray. However, is Click really addressing the 'gap'? There is too much churning going on in our industry just to save clients a few pence a month on a plan recently taken out, rather than actually addressing protection needs. It doesn't grow the industry, it just re-inforces the perception that cheapest is best and customers lose out on more comprehensive cover. Click churns business, so how Ray do you think this addresses the gap?
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Anonymous | 14 May 2010 9:49 am
Occasionally if an advisor here is lacking confidence, we encourage them to do a 'mystery shop' , to prove how good they really are.
When my colleague called Click, the factfind (if you can call it that) was a Fortis application, question for question. The call ended with bank details being asked for, so the 'quotes could be saved' whilst my colleague thought about whether to go ahead. They were accepted despite medical evidence that should have led to a postponement even with Fortis.
Any wonder the business falls off?
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Anonymous | 14 May 2010 10:04 am
I take it Mr Flannery is part of Click.
I am amazed that he says that he is filling the protection gap. How can he be? MM ran the story of the Click Fortis Life launch in October 2008 (18 months ago). 6 months ago (Flannery's words) they agree a pre-payment of outstanding clawback liabilities. So in 1 year of business with fortis they get clawbacks of £1.2 million.
The persistency rate must be really low to achieve that feat.
Also, if the boast of £120,000 commission per day is right and therefore this is not a probelm, how come the debt exists in the first place? The costs of running the business and clawback liabilities must exceed income to have to reschedule clawback liability payments.
Perhaps other providers who have done business with Click might state what clawback is owed to them - let's get the full picture.
I don't understand Mr Flannery's comments. Isn't this just a flawed business model that rebrokes business and then rebrokes that business until it runs out of business to rebroke?
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alan c | 14 May 2010 11:03 am
Regulation?
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