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Doesn’t treating customers fairly apply to life offices?

I recently stumbled upon a piece of paper from Friends Provident which read: “As part of our policy to treat all customers fairly, we are upgrading our contracted-out policies to be more in line with stakeholder. As a result of this, we have capped commission at a maximum level of 2.5 per cent for all rebate contributions received after April 6, 2005.”

1: Upgrading to stakeholder is, I believe,a contradiction n terms. How can you transmogrify a reasonable non-stakeholder personal pension into a piece of cut-price rubbish and call it an upgrade?2: How is it treating customers fairly to impose such a change unilaterally without prior notice, let alone asking permission, given that such a change constitutes an unwarranted and fundamental interference in the relationship between the client and his adviser?3: Quite obviously, Friends Provident do not see IFAs as their customers as they were quite happy to accept the business in the first place without giving us any warning that at some future date they might well reduce the commission without prior consultation. If they had done so when tendering for our business, they would almost certainly not have got it or anything else.

We have never placed business with any life office because the commission was more than the generally accepted going rate. The exception would be where any extra commission could be rebated to the benefit of the client.

But to accept business on one set of terms and then move the goalposts against the interests of the IFA and his relationship with his client can hardly be described as honourable business practice, let alone treating anyone fairly.

TCF has become a handy term to justify just about any action on the part of most of the life offices. Compliance overheads have become almost impossibly onerous and service standards have deteriorated to the worst levels in living memory so how can cutting commission and cutting charges be argued to be TCF? If anything, existing charges need to be defended on the grounds of maintaining service standards.

On a slightly different note, I have received a response to my last missive to Prudential on the subject of their unilateral decision to stop sending us copies of any material they send our clients.

My latest correspondent says: “We do believe that our processes treat both financial advisers and customers fairly.”

What can you do in the face of a statement to the effect that black is white? It makes a sorry joke of the FSA’s prescribed procedures for complaints against providers.

I have also asked several times since February: “Given that you have no facility to keep us informed of year to year progress on any business we might place with Prudential, I would be interested to know on just what basis you might have any expectation that we would ever consider doing so again?”

That question remains studiously ignored, as does my suggestion that gener-ating such statements and mailing them electronically to the IFA might be a cost-effective alternative. Draw your own conclusions.

Does the FSA have an opinion on the matter or any intention of taking action? It seems to me that TCF is principally something with which to beat IFAs about the head while the life companies are allowed to do pretty much what they like just so long as they pay lip service to the idea. How did it all go so very wrong?

Julian Stevens
Harvest IFM, Bristol

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