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L&G scraps protection top-up commission

Legal & General has stopped paying additional commission when an existing protection policy is topped up.

DPI Financial Services director Dennis Burling recently recommended a client increase their whole-of-life benefits during a review, which resulted in an increased premium.

But when Burling chased the extra commission due, L&G told him it was not paying commission on top-ups as it felt the practice was no longer in clients’ best interests. The decision also applies to unit-linked term insurance and critical-illness policies, according to L&G’s literature.

Burling says: “L&G insists that this is not a breach of their obligations but I feel it is a stab in the back for advisers who sold such policies in good faith on the basis that commission for top-ups and reviews would cover advice costs in future.

“Does L&G have an agenda to push advisers over to fees or is it simply cutting costs to bolster solvency at the expense of the adviser community?

L&G declined to comment.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 18th June 2009 at 2:53 pm

    L&G scraps protection top-up commission
    Typical L&G. Just one more reason to avoid them for anything unless there’s absolutely no other justifiable choice.

  2. I had exactly the same thing
    I record all telephone conversations and this change actually took place in about February and the member of staff I was dealing with didn’t know it had taken place. I gave teh advice to the client in good faith, only to find that I had effectively done it “pro bono” and felt totally unable to go back to the client afterwards and say sorry, here’s my bill for the advice as whilst we operate a commission offset model, this contract SHOULD have had this built in.
    As Julian Stevens said, yet another reason to NOT deal with L&G unless there is a clear benefit for the client. If there is an equally good company then use them instead.

  3. L&G scraps protection top-up commission
    Grow up people. Advisers need to concentrate on retaining customers throughout their lives and the long term of their policies. Up front commission only encourages short term gains for the IFA and not the long term service that the client both expects and deserves.

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