Legal & General is being accused of failing to communicate to IFAs that its pension term assurance policies are not written in trust, with some warning it could leave advisers exposed to misselling complaints.
The majority of PTA policies automatically come under a master trust or a deed poll scheme but L&G’s product is written under a contract rather than a trust.
The responsibility to place a PTA in trust rests with the IFA but there are fears that some advisers may assume it has been written in trust by the provider because this is the standard procedure with other PTA providers.
Highclere Financial Services partner Alan Lakey says L&G’s information on trusts appears in the technical guide on page 21 but says the provider has not made it clear enough to advisers.
Lakey says: “I do not think that all advisers will read the technical guide in such detail. There is a danger that those advisers will make the assumption that the policy is written in trust and inadvertently missell to their client.”
Hargreaves Lansdown head of protection research Jonathan Briggs says: “I can see that this could be a potential danger in the future because the consumer could be hit by inheritance tax if the policy is not in trust.”
A Legal & General spokesman says: “Master trusts have some advantages but can also be seen as a one size fits all approach. It is extremely difficult to construct them such that they provide for everyone’s personal circumstances. This is why we do not currently automatically write our Legal & General Telip policies in a master trust.
“Instead, we ensure that all advisers selling a Telip policy have access to relevant trust wordings and expert support.”