IFAs fear that life offices could become judge, jury and executioner in
the way they conduct their business under the latest proposals from the
The proposals, part of the ABI's Savings and Long Term Risk advice
accreditation project, suggest life offices will be able to take action
against individual IFAs if they believe the way the adviser conducts
business threatens its accreditation mark.
The ABI says an insurer will be able to gain accreditation under Saltr if
it meets certain criteria set out in Raising Standards – Version Two –
Proposals for Standards and Accreditation.
The standards include clarity and comparability of information, the
appropriateness of the product and persistency.
If a provider has poor persistency, then its accreditation could be
threatened, hence life offices' concerns over IFAs with poor persistency
But IFAs are worried they could be taken to task for poor persistency due
to circumstances beyond their control. Smaller firms are con- cerned they
could be hit hardest as life offices will not be able to afford to stop
doing business with large IFAs even if their persistency is low.
Although the issue is still under discussion within Saltr's IFA taskforce
headed by Aifa director general Paul Smee, IFAs are very concerned about
the direction of the final proposals.
Maddison Monetary Management managing director Mark Howard says: “How can
these insurance comp-anies become judge, jury and executioner?”
Carrington Investment Consultants operations manager David Rose says: “How
can a provider reach a conclusion about the advice given when they have
limited client information? How does an insurance company establish what
has been good or bad advice merely by persistency rates?”
IFA Taskforce co-sponsor and Scottish Amicable chief executive Roy
Nicolson says: “We need a protocol to make sure there is a fair dialogue
between IFAs and providers.
“But if an IFA is doing business with an office and the adviser has a high
decrement rate, then the office must consider not doing business with that