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Legg Mason U-turn on direct offers

IFAs have hit out at Legg Mason Investors, accusing it of disregarding them and reneging on its pledge not to offer non-commission-paying products direct to clients who have maturing policies.

IFA Stuart & Co complained to Legg Mason last year that a client with a maturing five-year structured product had been contacted by the firm offering to reinvest the cash into a new plan free of initial charges and up-front commission.

In a letter from April last year seen by Money Marketing, LMI apologised to Stuart & Co for the “inappropriate” wording of its mailing and said it was changing its future policy to ensure IFAs could take commission and that the situation did not recur.

But this month another client of the IFA with a similar policy received the same offer, again emphasising that Stuart & Co would not be paid commission.

The IFA lodged another complaint but was rebuffed by managing director of mutual funds Paul Boughton, who said the previous letter was not the current view of LMI and that no up-front commission would be paid to intermediaries.

Stuart & Co partner Colin Barrett-Treen says: “Legg Mason should not be supported by IFAs if they treat with complete disregard the people who introduced the business in the first place. It is difficult to trust a company which says one thing and reverses it within a year without notice.”

Boughton says: “Our current policy reflects recent difficult market conditions. It would not be appropriate to charge clients IFA commission.”

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