f.adviser rip off!

elpub

hi,i recently changed my life insurance from one i got through a financial advisor to one i got of the internet.
The financial advisor knocked on the door earlier today asking why we had changed and why not through him.
He said that as we had not completed 4 years on the policy he would have to pay £800 to the insurance company back in comission and would we take out another policy to reduce that figure for him.
The original policy was from aviva at £55 a month which we held for 2 years until changing to a much cheaper one at £25 a month.
My question is how can he owe that much to them?,is this possible?the amount of commission seems sky high.

magpiecottage

It is possible - you would have been given an illustration at outset which told you the amount.

You are fortunate, too. If he had included it in his client agreement, he could have charged you for this.

There can be a number of reasons why a premium is lower. One of them is that, all things being equal, the risk will be lower, assuming the new policy runs over the remaining term of the original policy (because you cannot now die in 2009!).

However, you are unlikely to find that is the whole reason and I would suspect that such a large fall means you are reducing the cover you are getting by shortening the term, reducing the potential payout or the circumstances in which it pays out. If making a guess, I would say you are giving up critical illness cover but this is just a guess (albeit an educated one).

Do remember, though, that if you get it wrong now, you have no comeback against anybody.

yelf

very feasible. Unless it said you would be liable for any clawback in commission in the TOB you dont have to do anything.

dunstonh

My question is how can he owe that much to them?,is this possible?the amount of commission seems sky high.

The amount is not sky high. You under estimate the costs of providing advice nowadays. Many people focus on the commission or fee but don't realise the amounts that way have to pay out.

Typically, an IFA is not that much more expensive than going DIY. FAs can be quite a lot more expensive as they tend to build in bigger margins. However, a difference of £55pm to £25pm suggests that cover was not arranged on a like for like basis and that options were left off of a lower standard of cover was arranged (or amount/term are lower).

payless

magpiecottage wrote: »

It is possible - you would have been given an illustration at outset which told you the amount.

.

Not if sold under ICOB or ICOBS rules.

payless

magpiecottage wrote: »

.

You are fortunate, too. If he had included it in his client agreement, he could have charged you for this.
.

commission clawback reclaim is not considered good practice..

If it was an originally agreed fee, offset by the commission it might stand more chance...

Either way I doubt the cluase is there- especially giving the wording of OP "and would we take out another policy "

dunstonh

commission clawback reclaim is not considered good practice..

If it was an originally agreed fee, offset by the commission it might stand more chance...

commission clawback from the client is disgraceful but fee agreed which is then collected by commission is considered good practise. (i.e. fixed fee an only commission taken to that amount is good).

payless

dunstonh wrote: »

However, a difference of £55pm to £25pm suggests that cover was not arranged on a like for like basis and that options were left off of a lower standard of cover was arranged (or amount/term are lower).

Although itt is possible that cover / benefits are the same IF
first quote was from an expensive ( single/ restricted panel) and senond one from a competitive provider on nil/low commission ( likely no advice- although its possible to find expensive options also "sold" on no advice)