Highclere Financial Services partner Alan Lakey has begun legal action against Forester Life over its decision to stop paying trail commission.
In April, the insurer confirmed it would stop paying advisers trail commission relating to the Children’s Mutual book of business. Instead, the provider will pay a non-negotiable sum of two years’ commission based on policies remaining in force until either maturity or 30 April 2016, whichever is earlier.
Lakey, who receives around £200 a year in commission from Forester Life, has submitted a claim through the small claims court for £2,150, equivalent to 10 years’ commission. He has been notified by the court that Forester Life intends to defend the claim. It has until the end of the month to file a defence.
Lakey says: “Many advisers will say £200 a year is not worth challenging but that misses the point. If Forester Life sets a precedent, what is to stop a larger provider doing this?
“Forester Life has breached the terms of its contract and should not get away with it.”
A spokeswoman for Forester Life says the insurer cannot comment on ongoing claims but adds: “We believe we have at all times acted fairly towards advisers and in policyholders’ best interests.”