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&#39IFAs losing £19m in Tep commission&#39

IFAs are missing out on more than £19m a year in commission each year due to customers surrendering their endowment policies rather than selling them, according to a Tep provider.

Absolute Assigned Policies came up with the figure on the basis of 1,050 individuals surrendering their policies to their insurer each week. The average commission on policies with a surrender value of £10,000 is £360 giving a total of more than £19m.

Clients stand to gain a 15 per cent higher payout by going through the Tep market than by surrendering to a life office, says the Association of Policy Market Makers.

When a customer requests a surrender value for their endowment policy from their provider, a letter is usually sent to the IFA informing them of the move. It is at this point the IFA could advise the client of other options such as selling to the second hand market.

The Tep market is growing rapidly as people get turned off by their endowment policies. The most common reasons for making the decision to sell a policy are restructuring financial priorities, debt or divorce.

AAP managing director Lee Portnoi says: “All we can do is shout as loud as we can and hope that our message is heard. While we would not encourage policyholders to sell policies, the fact is they could be much better off if their IFA advised them of the alternative to surrender.”

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