Sun Life Financial of Canada will stop paying advisers commission on existing business from next year following a review of its closed book of business.
The company, which closed to new business in the UK in December 2010, wrote to advisers last week offering them a non-negotiable lump sum in lieu of future commission payments.
The letter, seen by Money Marketing, says: “We have made the difficult decision that we will not pay any further commission on our policies, excluding i2Live policies, with effect from December 31, 2012. Instead we intend paying you a lump sum between January and March 2013.”
I2Live policies were the variable annuity product offered by the UK arm of Lincoln National Corportaion, which Sun Life Financial acquired in June 2009.
The lump sum is based on policies remaining premium paying until the policy maturity, expiry or vesting date, or June 30, 2017, whichever is earlier.
A Sun Life Financial spokesman says: “We are simply offering to vary the contract by paying the current present value of future commission early, calculated over four and a half years.”
Highclere Financial Services partner Alan Lakey says: “Clearly Sun Life Financial is not looking for new business and therefore it does not care if it upsets advisers.”
But Tower Hill Associates director John Lang says: “It is entirely reasonable to offer a lump sum in lieu of future commission. It will be intriguing to see if bigger players decide to follow suit, though I do not think that is likely.”