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Bacs says life firms could slash commission admin

Life insurers could save £3m annually by paying IFAs commission through the Bacs system instead of the traditional method of payment by cheque.

New research from Bacs, the UK&#39s automated clearing house, shows that 2.3 million cheque payments are made annually by life insurers to independent advisers.

It estimates the industry could save a huge amount of time and money by changing to Bacs payments, making it one of the biggest areas for potential savings in the industry.

Bacs says paying IFAs by direct credit is more efficient and faster and many intermediaries prefer to be paid this way.

Bacs estimates admin costs of up to £12.5m could be avoided by the industry if it switched to the direct credit service for all suppliers and distributors.

Direct credit means organisations can receive payments into a specified bank or building society account.

The system can be used to make any business payments, including salaries, pension and employee expenses.

Bacs spokesman Peter Blake says: “Many IFAs prefer to be paid by dir-ect credit as it guaran-tees regular cleared funds and is regarded as efficient and secure. The industry could save itself unnecessary costs by adopting this system.”


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