If IFAs / networks have commercial agreements in place with providers where they offer their clients higher premiums so that they can take a higher cut of commission, is that wrong?
Of course, the adviser’s first duty is to their client, but they’re also offering a quality service of advice that is rightly paid for via commission. Personally, I see no problem with different commission rates. Different advisers write different volumes of business with different commercial pressures, different lapses and NTU rates. Commission reflects this and rightly so.
However, when the result of this is premiums set deliberately high to ensure more commission, is that TCF? LifeSearch do not do this but, in a free market, if someone wants to offer a product at a higher rate, why shouldn’t they? The consumer is free to turn it down and go to another IFA who offers them better rates. Yet at the same time is the IFA really acting in the best interests of the client by offering them a distorted high price?
Almost all advisers who sell protection and understand its importance to their clients also understand that it can never be sold in volume in any way other than commission. The public, other than the very well-off and financially savvy, won’t pay a fee to get protection and will therefore be left without cover.
Commission in protection is in the public interest and, in theory, those who charge a higher price to get more commission will lose business to those offering standard rates. While the criticism of loading in order to gain higher commission is valid, I suspect that in the internet age of instant quotes and price comparison sites, those who take the high price road could end up losing out in the long term.