Protection fears on letters of authority
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CBK Colchester director Peter Chadborn has warned that the blanket approach taken by some life offices in responding to letters of authority is seeping into the protection market.
He says that when he takes on new clients, it is common for product providers in other financial sectors to issue stock answers in response to letter of authority requests for client-specific information but says this is now happening more often with protection providers.
He says: “There has recently been a trend for providers to take this somewhat insulting approach of replying to advisers’ letters of authority with just stock information. This seems to be becoming more common in protection.”
Chadborn says there also seems to be a reluctance among protection providers to put information given over the phone in writing.
He says: “This is another consequence of the price war. Margins are so tight that the life offices see it as easier to have a formatted response but as advisers are being increasingly fussy about where they put their business, this is incredibly short-sighted on the provider side.”
Axxis Financial Planning director Owen Wintersgill is experiencing similar problems with protection providers.
He says: “This is definitely a problem. Product providers deliberately try and nitpick and come up with absurd reasons for not accepting a letter of authority. Common sense is not always allowed to prevail and I would say that the situation is worse now than it was before.”
Master Adviser senior partner Roy McLoughlin says he has not had problems on protection business specifically.
But he adds: “What you tend to find is far too many providers never really answer the questions and you end up hanging for a call centre for ages. It can be a nightmare. Providers could be more helpful as arguably they may not been in touch with the client for a long time.”
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