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CA in commission plea on endowments

High commission paid to IFAs should instead be used to meet customers&#39 endow-ment shortfalls, says the Consumers&#39 Association.

The CA&#39s intervention comes as some of the UK&#39s biggest life offices embark on a commission war to win market share ahead of the onset of stakeholder pensions next April.

Many of the providersinvolved are also writing tocustomers, warning themthat they face a shortfall on their endowment policies.

Among the leading players in the commission war are Clerical Medical, Scottish Amicable, Scottish Equitable, Scottish Mutual and Stan-dard Life.

The CA says providers should focus on their existing loyal customers by ensur-ing they have sufficient endowment funds to meet their mortgage loans instead of paying high up-front commission to IFAs for new stakeholder-style pension business.

Senior policy adviser Philip Telford says: “Loyal customers are not treated well. I would encourage life offices to do something to make up the shortfalls on endowments. If they did, it would be a tremendous public relations coup for them.”

Scottish Mutual pensions development director Leslie Gray says: “Nothing has changed within the pension market which negates the need for advice whether through independents or tied sales advisers.

“Therefore, if we do not fund for the need of advice we will get the situation where no advice is given and I am sure the Consumers&#39 Association would not want the scenario where adequate advice onpensions is not given.”

Informed Choice mana-ging director Nick Bamford says: “It is entirely for product providers to determine how they spend their market-ing budgets.

“I remain unconvinced that there is such a huge endowment crisis.”

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