Advisers and some product providers have hit out at the practice of loading premiums, where distributors are asking providers to inflate premium rates so they can take a higher slice of commission.
But other product providers argue that a small premium loading can be justified in certain circumstances.
Aegon head of underwriting and claims Matt Rann says: “We would not get involved whatsoever. We want to look after the customer and asking them effectively to fund higher IFA commission is completely and utterly wrong.”
Legal & General, Fortis and Axa also say they would not support this practice.
But Friends Provident head of protection Ed Stuart-Brown says there is a margin of 5 or 10 per cent where loadings would be acceptable to take into account the added value of the advice process and additional costs such as marketing.
Aviva protection director Richard Verdin says: “It is not unreasonable to assume the retail price of a lot of insurance products differs by channel, structure and other factors.”
Bright Grey proposition director Roger Edwards says: “If there were a legitimate reason why that was happening, perhaps an extra element of advice, I probably could not see too much wrong with it.”
Highclere Financial Services partner Alan Lakey says: “I deplore this practice. I do not believe it is appropriate to push up premiums from one originating source simply so distributors can take a higher level of commission.”
Personal Touch Financial Services director Dev Malle believes the practice encourages churn as when policies come up for renewal, advisers can easily rewrite the same policy and offer a cheaper premium.
He adds: “One of my big concerns is that if it were to go in the consumer press that certain intermediaries are accepting loaded premiums for higher commission it could be a very damaging PR exercise for the broker market in general.”