Advice needed from an IFA/FA please

WASHER

I took out a personal pension plan in 2005 through my IFA, he was on commission basis. I needed the pension as I was self employed at the time. However, a year later I found employment, and decided to join the company pension scheme, as they contributed as well as me, I couldn't afford to keep up the payments on my personal pension scheme at the same time so I cancelled it.

Two years later, and today I have received a letter from my IFA asking for me to refund partly his commission, I no longer have any paperwork from my IFA regarding the sale of this only the actual documents from the pension company.

Can he ask for the commission to be refunded and if so, how long after the cancellation can he ask for the money back. I think this a little strange two years after the cancellation.

I would appreciate any advice.

WASHER

dunstonh

Can he ask for the commission to be refunded

Simple answer is no. However, if you did it on fee basis with commission offsetting the fee and he has a fee agreement confirming this then yes he can.

Ask to see the fee agreement signed by you agreeing to this. Without they he doesnt have a chance of enforcing it.

WASHER

dunstonh, many thanks for your reply.

The letter states and I quote: "When we originally gave you advice you agreed for us to be paid on a commission basis. As you have cancelled the policy, we have had to pay back some of the commission. In accordance with our Terms of Business we reserve the right to pass this charge to you."

Firstly, Can I ask the IFA for an original signed fee agreement, I have taken out many policies with this IFA in the past and therefore he has my signature on many documents and that's the reason I am asking for an original. Also can I ask the IFA for a copy of the letter from the pension company requesting repayment of some of the commission.

WASHER.

dunstonh

Firstly, Can I ask the IFA for an original signed fee agreement

Absolutely. If he comes after you throught the courts for the money then he would be expected to present this agreement that a commission transaction was actually a fee transaction.

I have taken out many policies with this IFA in the past and therefore he has my signature on many documents and that's the reason I am asking for an original.

Doesnt have to be original. A copy is fine. PDF storage is common place and acceptable.

Also can I ask the IFA for a copy of the letter from the pension company requesting repayment of some of the commission.

Doesnt quite work that way with most IFAs. If he is a network member than a contra entry (clawback) is taken from the account. This is offset with credit entries. Almost like a bank account. Only if the firm is directly authorised or handles their own commission run does the insurer invoice the firm.

Another point is that even if a fee agreement exists, there has to be an amount on the fee. So, lets say the agreement was for £1000. If after 1 year there is a clawback of say £750, then he cannot come after you for £1000 but the £750.

There are merits to the hybrid system where you agree a fee and use commisison offset. However, it is abused by some but the FSA have their eyes on this and the TCF rules should protect you somewhat.

A fee agreement should state an amount (or percentage). That amount (or percentage) should not be the equivalent of commission and should be reasonable for the level of work done.

Most firms that try this on dont have any fee agreement on file but threaten court action and try to scare you into paying. If they do this, you can get dirty yourself and put a complaint in making it clear that if they do not cease their attempts to unfairly chase you for money that you are willing to refer the case to the FOS. A referral to the FOS would cost them over £400 non-refundable even if the FOS agree with them and they cannot come after you for the £400. If the FOS dont agree with them, then they have to have that complaint on file to be seen in their compliance checks by their principle or the FSA. Both of which could take an interest in not just your case but others and that can open a can of worms. So, you could find they are not willing to through £400 away and a complaint on file and back down.

WASHER

dunstonh, Once again I thank you for your reply, very quick and in detail too.

Its not as though I don't want to repay this, I will, I find it very odd that a letter arrives 2 years after I cancelled the policy and it states I have seven days to pay.

One more question if I may, I have had several policies with this IFA, would I have signed an agreement with every policy I took out with him, or just the one covering all. I want to make sure it is dated correctly.

I appreciate your help and knowledge.

WASHER

dunstonh

One more question if I may, I have had several policies with this IFA, would I have signed an agreement with every policy I took out with him

On fee basis yes you would as its a fee per transaction. On commission basis no. On the basis he is referring to then you would expect it per transaction.