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Pru lets ‘small number’ of advisers exceed charge cap

A “small number” of advisers have asked M&G Prudential to breach its adviser fee limit, Money Marketing has learned.

Earlier this year, the company introduced a cap on initial adviser charges of a maximum 5 per cent or £20,000, whichever is lowest, and 1 per cent for ongoing fees.

While the firm did not disclose exact numbers, some three months after the new charging structure came into effect, a Prudential spokeswoman has confirmed to Money Marketing that some advisers had applied to breach the limits, and that higher charges in some complex cases had been approved by the firm.

Pru expands adviser platform offering

The spokeswoman says: “We have received a small number of applications in which [fees] have exceeded our limits, a reasonable percentage of which we have accepted as we believe it is justified because of the additional work the adviser has needed to undertake.”

Pru reveals self-employed advice arm plans

When the company introduced the change in fee structure, it asked advisers with a case where the charging level could exceed these limits to provide additional information around the background of the case and/or client before submitting their application.

It said this would be used to review whether to approve exceeding the level of adviser charges.

Type of charge Proposed limit
(At plan/product level)
Initial charge % 5%  the lower of
Initial charge £ £20k
Initial charge – regular premium 5% of premium or 25% of first 12 monthly premiums
Ongoing charge % 1% of the fund value
Ad hoc charge £ 2% of fund value in a 12 month period

Source: Prudential

The spokeswoman adds: “We look at each application on a case by case basis and, generally, we have found that advisers have been supportive of our stance.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. I think Prudential have damn cheek dictating to advisers the level of fees they are allowed to take from the contract.
    The client agreement is NOT a tri-partite agreement between the adviser, client and Prudential. If the clients agrees and instructs the adviser to take the fee from the contract, then the Pru as no say in this. If they refuse, then place your business elsewhere.
    I wonder what would happen if advisers tried to impose “a charge cap” on the Pru, what they would have to say

    • I agree with you. In no way would I condone outrageous charges but it is nothing to do with the Prudential. They appear to want to act like a sheriff in the wild west! They have enough previous issues, I would have thought, without inviting any more criticism. As far as I am concerned, in my own dealings with them, it is they that are more like a bunch of cowboys.

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