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&#39Half of clawbacks are made in error&#39

Around half of life office commission clawbacks are made in error,

according to DBS.

The Huddersfield-based IFA network says some 45 per cent of clawbacks

arise from life office administration blunders. It discovered the scale of

the problem after setting up an online system which enabled IFAs to check

up on their commission daily.

DBS says no life office can be singled out and clawback is a generic

problem. Rival network Misys has also experienced mistakes with clawback

claims. Life offices reclaim commission paid when regular-premium policies

such as whole of life and endowments are discontinued. Policies are

discontinued when they are surrend^_ered, paid up or the policyholder dies.

Industry analyst Ned Cazalet, of Cazalet Financial Consulting, says over

three to four years, between 15 and 20 per cent of policies go off a

provider&#39s books.

The DBS system has pro^_ved popular with IFAs and has 1,000 daily users

compared with just 25 a year ago.

Life offices put the mistakes down to human error and system errors. CGU

is trying to overcome the problem with a fully automated system.

Misys spokeswoman And^_rea Lane says: “We have experienced mistakes. We

are working with providers to try and sort it out so that IFAs are not

disadvantaged too much.”

Sofa spokesman Robert Reid says: “It would not surprise me, given life

office commission systems are out of date with the legacy of so many

bolt-ons.”

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