Unresponsive broker - what next?

UK007BullDog

The old policy could have covered illnesses that the new policy would not. As some illnesses are no longer always fatal they have taken them out of new policies. However if you get such an illness in the future you would have gotten a payout on the old policy but not the new one.

As for the payment. Some brokers now try to stop clients from cancelling or other advisers churning their advised sales. So what they do is this:

You sign this life or critical illness policy and the fee of 2% we would have charged for your mortgage arrangement is waived. However you have to stick with this new policy for 2, 4 or 5 Years (clawback periods of the providers, they pay the broker the commission and if it gets cancelled the broker has to pay back some of the money depending on how long the policy ran). So if you do cancel the broker expects you to cough up the shortfall, i.e. the money they had to pay back, hence the 3% in the first year, 2% in the second.....

HTH

UK007BullDog

MGM never heard of them, must be some niche player or very small company.

For Critical Illnes I can think of better ones than them, Scot Prov, Friends Prov, Bright Grey, Bupa, etc.... depending on client needs, ages etc.

waterbaby

dunstonh wrote:

The fee agreed was 2% of the mortgage which equals £2000. If the commission from the mortgage AND the life cover is in excess of £2000 then he should be rebating the difference back to you.

When this particular option is chosen (and it is a valid option), the commissions earned must be disclosed to ensure no fraud is taking place. You can check the mortgage KFI (quote and figures etc) for the mortgage commission and the life assurance illustration. The life assurance commission isnt required to be disclosed unless it is being used to offset a fee.

Right, I will request the life assurance commission details on the basis that it is being used to offset a fee. Is there any legislation or fancy terminology I can use to make it look like I have some idea of what I am talking about?

However I can't find my KFI. And I'm usually so good with my records. Will the mortgage company tell me what commission they paid?

dunstonh

What does 'tied' mean?

It means that they are tied to MGM for products and not the whole market. I cannot imagine too many MGM products are sold by whole of market advisers.

What sort of fees do brokers usually charge then? It would be useful to know then I can query why it is out of line, having gathered some evidence.

Most charge nothing. The commission covers the costs.

So it seems my major complaint is that I was sold insurance that was not suitable, or was inferior to what I had, and that this is not acceptable because they should have been acting in my best interests?

If a tied agent was acting in your best interests, they would have told you go to an an independent.

Is there any legislation or fancy terminology I can use to make it look like I have some idea of what I am talking about?

The FSA would class this under Treating Customers Fairly rules (or TCF as its more commonly known as in the trade. Its quite a straight forward thing. They are charging you a fee to which they are applying a 3 year liability. You need to know what that liability is and how they have worked it out. This means you need to know the commissions of the mortgage, life and house insurance (if applicable).

However I can't find my KFI. And I'm usually so good with my records. Will the mortgage company tell me what commission they paid?

Ask the broker for another copy. They must keep a copy on file for reference and times like this. You dont need to say why you need it. Just tell them you cant find your copy and can they give you a copy.

waterbaby

dunstonh wrote:

If a tied agent was acting in your best interests, they would have told you go to an an independent.

I understand - but surely if they did that, they would have no customers themselves then. So as they are allowed to exist, it must be legally acceptable for them not to act in the customers best interests. Wouldn't I have trouble there?

dunstonh

I understand - but surely if they did that, they would have no customers themselves then.

Correct. So they dont.

So as they are allowed to exist, it must be legally acceptable for them not to act in the customers best interests. Wouldn't I have trouble there?

They are meant to act in your best interests. However, tied agents have sales targets, sales managers putting pressure on them and are generally paid less for the products they sell, forcing them to sell more. They also have league tables and incentives. So the lower end face extreme pressure and the top end what to go on the world holidays etc. Ironically the best advice tends to come from those in the middle that are never going to get on those incentives and arent under pressure to perform.

You arent likely to be mis-sold but you arent likely to end up with the best product. The fact it was MGM is a good example of that. You have a whole number of whole of market advisers on here that wouldnt dream of going near MGM. An MGM tied agent doesnt have that choice.

The tied agent may think they are doing the right thing. I recall my tied days and you get so fed so much rubbish from your employer and you think what you have to offer is great. Its only when you go independent that you realise how poor it was (also most IFAs who come from tied agent background will tell you that their knowledge is far superior to their tied agent days).

waterbaby

OK well I can't see how I can really complain that, having approached a tied agent, they have sold me a product from a company that they were tied to, seeing as they are apparently doing nothing wrong (legally) by being tied.

I'll speak to MGM tomorrow and see if I am actually insured. Hopefully not!

P.S. Is it ok to have two life asurance policies at the same time?

Cara79

waterbaby wrote:

OK well I can't see how I can really complain that, having approached a tied agent, they have sold me a product from a company that they were tied to

But that's the point, the policy they sold you was inferior to the one you already have. Therefore their 'advice' should have been to keep the existing policy.

You definitely have right to complain there. I indirectly work for a brokers and I know our brokers are not allowed to give advice cancelling an inferior policy.

dunstonh

Tied agents are not really meant to recommend cancellation of someone elses plan. They do not have the FSA authorisation to discuss or comment on competitors products.

You will probably find that it has been documented that you chose to cancel. Take a look at the recommendation letter that would have been sent to you and a copy of the protection factfind that you should have been given. See how they document the cancellation.

waterbaby

dunstonh wrote:

You will probably find that it has been documented that you chose to cancel. Take a look at the recommendation letter that would have been sent to you and a copy of the protection factfind that you should have been given. See how they document the cancellation.

I've found the 'Recommendation Report'. Unfortunately I can't see anything useful in it. It talks about a 'cost efficient product that provides life and critical illness cover', and 'this policy will cover your new mortgage in the event of your death or one of you contracting one of the specified illnesses' but no mention of our pre-existing policy.

Grrr....