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Claims go up in smoke

Following a recent heart attack, a client claimed on several critical-illness policies held with Legal & General, not set up through myself, only to be told that for two out of the three policies, he would not be paid out due to non-disclosure of smoking at the time of the applications.

Following this, his other two policies for life cover were reviewed and cancelled from outset, with premiums refunded.

One of these policies I had set up three years after the others on assurances that he had given up smoking for over12 months, evidently then restarting again.

How L&G can justify the cancellation of this latter policy after this time is dubious at best, without a steady list of evidence during the intervening period. As a result of this, I now face a full clawback of all commission paid three years ago, with a full premium refund to the client.

Time and service has now been given for no payment whatsoever and
I feel that this treatment by Legal & General is very unfair and excessive and is in breach of the treating customers fairly doctrine, as I consider that advisers are the customers of the insurance companies.

Surely, what should be the fairest outcome is for the client to lose the premiums paid and for a proportionate clawback of commission to be taken.

I have also for a while now wanted to insert a paragraph into my terms of business letter to allow a cost reclaim from the client where clawback occurs where no fee is agreed for services. However, this is apparently also currently not permitted by the regulator.

This places us between a rock and a hard place once again. How are we expected to protect ourselves from unscrupulous clients and also make a decent living in such a regime?

We are held to ransom where the client is disadvantaged. Why does this not apply in reverse?

Dennis Burling
DPI Financial Services,


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