Prudential's decision to alter the terms of critical-illness applications awaiting acceptance terms has understandably resulted in outrage in the IFA community.
After 41 years in the business, I was not remotely surprised. Nor am I shocked at life companies deducting an MVA when projecting a maturity value. It is obvious to any observer that an IFA needs eyes in the back of his or her head.
Over the years, and particularly in the last five years, my ticker has become immune to the blood pressure-inducing behaviour of product providers. At this stage, I pass no comment on the Prudential decision until I have seen more than what the headline writers have conveyed in the first hot off the press articles.
However, the immediate reactions from IFAs illustrate the intense love/hate relationship which exists between the product manufacturers, which I view as “the industry” and the advisory community, which is where I am comfortable using the description “the profession”.
The profession is developing its technical standards at a fast rate, as evidenced by entries to examinations and attendance at seminars. Gone, thankfully, as a result of the T&C regime, are the days when some people entered fleetingly into the business until something better turned up. Regulation has ensured we have to take our responsibilities seriously.
On the other hand, there will be none of us who believes that the product pro-viders' standard of service has improved. I am not talking about isolated errors we can all make and do.
I am referring to a culture where admin mistakes and delays occur and incorrect information is supplied as the rule rather than the exception. Frankly, I would feel very disheartened if I was one of the “local” members of staff working hard at improving relationships with IFAs such as ourselves whose efforts are frequently undermined by head offices and “service” centres.
There are cases where literally nothing has been correct. Illustrations have been wrong and “corrected” ones have been wrong. Forms sent out have been wrong or are missing. Meetings have had to be postponed at great inconvenience to clients.
Companies change their minds about transactions citing “I have just found out our systems won't allow that.” Errors are excused by “Know we've made a mess of this but neither I nor my team have had enough training”.
Recently, an MVA was incorrectly deducted from a client of mine at the selected retirement date. When corrected, the policy document was incorrectly produced with yet another error.
In spite of many telephone calls, additional correspondence and a re-arranged additional out-house client appointment invoiced to the company concerned, the best their IFA relations department could do, after the corrections were made, was to tell us what our hourly rate should be, how long we should take and to cross out the additional appointment.
No product provider tells us what our rates are – they are published and have been for many years.
The companies will need to adjust to a new world where the menu option determines that clients know our services and the costs of them. If companies mess up (sorry, why did I say if?), it is not for the client to pay for our resultant time. Product providers will have to pay for the additional work they have caused and it should not be for them to be both judge and jury.
If it was not for IFAs checking every scrap of paper and, behind the scenes, rectifying errors, I wonder how much worse off consumers would be? Something, perhaps, for those who demean the value of advice to think about.
If companies will not stand by delays and mistakes, it follows that their staff will not take their responsibilities seriously. Why should they if there are no consequences?
If product providers engage, as some do, in the appalling banking approach to service evidenced by “Press One if .etc” IFAs will increasingly be dealing with people who do not take ownership of problems.
They will also find that every time they want to discuss a case, they are repeating a story over and over again.
Let us be clear. Standards are rubbish, with a few exceptions, and 30 to 50-day turnarounds are unacceptable. Some of the worst offenders even get accreditations for raising standards. You really could not write the script.
An earlier writer in these columns said we need an arbitration system. I agree but, my goodness, it will be considerably overstretched in a matter of days.
Len Warwick is managing director at Warwick Butchart Associates