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IFAs fear life office powers in ABI scheme

IFAs fear that life offices could become judge, jury and executioner in


the way they conduct their business under the latest proposals from the


ABI.


The proposals, part of the ABI&#39s 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&#39 concerns over IFAs with poor persistency


levels.


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&#39s 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


IFA.”

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