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Tied agents back contracting in while IFAs baulk at advice

Almost four times as many of Axa’s tied-agent clients have asked the life office to contract them back in to S2P as those clients contacted via IFAs, according to the life office.

Industry experts says the discrepancy between the two figures reflects IFAs’ concerns on advising on contracting out.

Axa could not confirm numbers but did confirm the ratio. The company first wrote to its 175,000 clients and their advisers two years ago, strongly recommending they contract back in but not unilaterally contracting them in, as pre-viously reported.

The overall ratio of Axa clients who have contracted back in is 6 per cent.

Axa has twice as many IFA clients as it does tied clients.

Most life offices wrote to clients at the end of last year after the ABI issued guidelines on communicating the message to clients. Standard Life wrote to 374,000 clients and 15 per cent, or 57,150, of its clients have now contracted back in.

Prudential says it is still collating the data but so far between 8 and 9 per cent have contracted back in.

Pru wrote to male clients aged 60 or over and females aged 54 or over and told them it would contract them back in unless they informed them otherwise. Only 2 per cent of the 5,000 people contacted opted to remain contracted out.

Over 10 per cent of Norwich Union’s clients have contracted back in.

Legal & General only wrote to IFA clients at the start of this year and is awaiting data.

Hargreaves Lansdown head of pension research Tom McPhail says the business risk for advisers means that many of them are just giving the facts rather than a firm recommendation.

Axa spokesman Steve Muir says: “The message to our tied customers was written more strongly but the recommendation was the same and the numbers do not stack up.”

Norwich Union head of pension Iain Oliver says: “We always knew that a lot of people will not pay for the advice on whether to contract back in and advisers are reluctant to advise on it.”

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