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Commission conundrum

Some of our clients recently transferred to our agency a low-cost endowment on which they have had nothing at all in the way of any after-sales advice or service from the agent who originally sold it to them.

Our standard policy appointment instruction confirms that the clients are happy for all future commission to be paid to our agency.

Legal & General has written back saying that they will not transfer any commission payments without a letter from the policyholders stating that they are getting ongoing investment and/or financial advice from us (easy enough to incorporate into our app-ointment letter) and a letter from the ceding IFA auth-orising transfer of all future commission (not a snowball’s chance in hell, of course).

Apparently, these req-uirements follow on from L&G’s interpretation of FSA rules. The FSA claims it wants to see clients better served over the long term regarding their existing policies and invest-ments. On the strength of the FSA’s rule, the only way that any advice or service can be provided by a new IFA in respect of an existing policy is for free (unlike the staff at the FSA, our income is not funded by compulsory levies against other institutions so this is not a commercially viable option) or if the client is prepared to pay a fee.

How likely is that in respect of a policy such as a low-cost endowment in which the client’s confidence may well be at an extremely low ebb anyway (assuming, of course, the client can afford to pay a fee?) Not very, I think. So such policies are likely to remain chained for ever more to the agency of a company who flogged them originally and has provided nothing in the way of any service or advice since.

Is this the FSA’s idea of progress? Probably it is, in the mind of some big-oted back-room bozo with no idea at all about the realities the com-mercial world. Just when are these people at Canary Wharf oing to wake up and stop damaging the industry and its relationship with its clients? I am not holding my breath.

Julian Stevens WDS,Bristol

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