Advisers have hit out at the move, suggesting that Clerical has been heavy-handed in its actions and could be using the situation to retain the trail commission for itself.
Clerical Medical recently contacted 2,000 customers to check their personal details and ask if they still used an IFA.
If the client said they no longer actively deal with an adviser, Clerical wrote to the IFA telling them they will no longer get trail commission on the product.
IPFM director Luke Gibbon has attacked Clerical’s decision, claiming that instead of checking customer details they have actively looked to remove trail from the IFA. He says: “It is stealing from the people who feed it. Clerical says this was a routine check but why not ask us about their details? It sounds like it was commercially led.
“The client they have removed my trail from has not done business with me for years but if they asked for advice on financial planning, I would provide it. Will Clerical do that? Will they offer fair, unbiased advice on their with-profits fund, for example, if the situation comes about?”
A spokesperson for Clerical Medical says: “Several hundred customers tell us that they no longer have an IFA. Under FSA requirements, we have to act on such instructions. If the customer is mistaken and the IFA is advising the customer, we will switch the trail commission back on immediately.”
Worldwide Financial Planning IFA Nick McBreen says: “If an IFA has contractually agreed a deal for payment through initial commission and trail, surely that is what the deal has to be?
“On the other hand, the FSA is keen that you provide a service for that trail and advisers need to be careful in this area.
“If Clerical has not gone to the IFA prior to turning off that commission, then it is a bit cloak and dagger.”