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Skandia denies taking IFA commission in L&G deal

Skandia has blamed poor communication for bringing about accusations that it is taking commission from IFA sales of Legal & General annuities.

The insurer signed an annuity deal with L&G earlier this year and started sending letters to IFAs with clients approaching retirement about their annuity options.

The first option is to complete an acceptance form and return it to Skandia, which will arrange the annuity with L&G. Skandia then receives 2 per cent commission from L&G and the IFA receives nothing.

Skandia alternatively inv- ites the client to buy an L&G annuity via the IFA or use the open-market option to choose from other annuity providers.

QS Financial director Graham Bowser believes Skandia is effectively taking commission for work done by the IFA if the adviser opts for the L&G annuity and instructs the client to fill in the acceptance form provided by Skandia.

Skandia pensions marketing director Nick Bladen says: “We encourage IFAs to use the open-market option. The first option is a default option that we have to offer. Following feedback from intermediaries, we appreciate the letter is not well worded and will make it clearer.”

Bowser says: “An IFA could recommend an L&G annuity through the open market but will have difficulty explaining to the clients why they could not have completed the acceptance form in the first place.”

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