Ivan Massow says he faces personal losses of £200,000 as a result of the closure of his commission return business.
Massow announced last week that the service would be closing due to escalating regulatory and professional indemnity costs. It launched in 2011, offering to return 80 per cent of a client’s trail, whilst keeping 20 per cent.
An email to clients last week stated the firm would retain all future trail income unless the clients moved to another firm. It said: “You could do nothing – but we will not be able to rebate any commissions we receive, and will keep them…. This may be useful for people who get little or nothing back and quite simply can’t be bothered to move their affairs.”
Massow, a former IFA, refused to supply a value of the trail payments the firm currently receives but says it is likely the firm will de-register at some point with remaining trail staying with the relevant insurers.
Speaking to Money Marketing, Massow says: “We have had to make this horrible decision and it is all coming at a massive personal cost to me. Cleaning up the mess will probably cost around £200,000.
“We just do not have the resources to pay out the small amounts of trail. It takes a chartered accountant to work out who it all belongs to. I promise you we are not making a profit out of this.”
Barretts Financial Solutions senior partner Kim Barrett says: “This is an awful lot of money to lose for what should really be a low cost business.”
Thomas and Thomas Financial Services managing director Darren Lloyd Thomas says: “I think the commission that is being retained here should be given to charity.”