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Holloway says CP121 could spell the end for friendly

Holloway Friendly Society says it is facing extinction if the FSA&#39s proposals for commission agreements are adopted.

The friendly says its biggest product, its income protection plan aimed at low-income tradespeople, could be blown away under the proposals to stop IFAs getting straightforward commission.

Holloway says sales will be hit as low-income self-employed workers are unlikely to pay fees. Ninety-five per cent of the sales are through IFAs, who are paid by commission.

Holloway&#39s plan, which has been operating since the 19th Century, is popular with self-employed tradespeople such as buil-ders, carpenters and electricians because it is not loaded on the basis of occupation.

But the tax concession on which the plan is based means the FSA&#39s proposed defined-payment agreement could not work as excess commission can not be rebated into the product because it would be treated as unearned income.

The friendly society says rebating would be unworkable as the client might leave the scheme.

Chief executive Ian Gardner says: “My actuary has told me that CP121 could put us out of business. These proposals do nothing for lower-income groups who want to protect themselves. The future looks bleak if we can&#39t sell through IFAs.”

An FSA spokeswoman says: “The Holloway plan has special features which we are studying and examining as part of the consultation exercise.”

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