Life Insurance commission 'clawback'!

steveb_2

Thanks
I'll ask for duplicate contract documents, as this will verify what I may or may not have been told. It is business protection insurance for my Ltd company, so any claim will be against that. The original IFA company was Ltd, but the individual IFA has since formed his own company (sole trader). If it were any other liability I would assume it was up to 'x' Ltd to sue me.

claretmatt

Does a need for insurance still exist?

You could amend the cover to something more affordable.

ACG

claretmatt wrote: »

Does a need for insurance still exist?

You could amend the cover to something more affordable.

Why would you want to stick with an advisor who basically tells you, you owe him £2k?

The advisor should have either gone down the route of trying to resolve the issue rather than just saying you owe me £2k.

Meeper

This is not enforceable. Generally speaking, it is highly unlikely that even if he did have a fee agreement drawn up, there's no way any court would uphold it in these circumstances. You are under no obligation to have life insurance. The adviser benefitted from it by taking "indemnity" (lump sum) commission. If you cancel it, the commission is taken from him. Simple as that. If this was a concern for him and would have meant financial difficulties, he should have taken the commission on "non-indemnity" terms, i.e. a monthly proportion of the payment you were making. That way, if you cancelled your insurance, his commission would simply have stopped with no clawback. That would have been fine if he hadn't been trying to make as much money out of you in the first place.

You should do a freedom of information request on his company KPI's, to see how much of his business his has placed with Bright Grey, Scot Prov and BUPA compared to Aviva, AXA and Friends Provident. The former all have 2-year commission clawback periods, and the latter have 4-year ones. The 2-year periods are favoured by less scrupulous advisers because they can go back and re-broke the insurance in 2 years time to a different company and pockt another load of indemnity commission. Finding out where he sends his business will give a good indication of whether you are dealing with an adviser with a conscience and professional attitude or not.

opinions4u

You should do a freedom of information request on his company KPI's

Are private companies covered by the Freedom of Information Act? Don't think so.

steveb_2

ACG wrote: »

Why would you want to stick with an advisor who basically tells you, you owe him £2k?

The advisor should have either gone down the route of trying to resolve the issue rather than just saying you owe me £2k.

I don't want to stay with the IFA at all, just reduce my costs as much as possible. I don't need (I believe) that level of cover any more, so wanted to stop the policy, but the IFA implies that even if I reduce the premiums he will still enforce the clawback.

Meeper

I would be amazed if he is able to enforce it. And by amazed, I mean you'd have to pick me up off the floor, slap me ni the face with a haddock and use smelling salts to bring me round.

I have been advised by one of the top solicitors in the country in this area that it would be almost impossible to draw up a contract so tightly that a court would enforce it over and above someone's rights to cancel their policy. Then, why should a client have to pay the adviser's commission clawback? That's a ridiculous situation. If the client doesn't need it any more, he doesn't need it. If the adviser was concerned about clawbacks, he should have taken drip commission.

steveb_2

I didn't realise that there were 2 types, and I would have thought that he would have factored in a cancellation %age into his income figures anyway.

amberfs

I am curious to ascertain how much you would have been willing to pay as a fee for the service offered and how much the IFA's / Mortgage Brokers's that have responded would have accepted as reasonable remuneration for arranging a similar contract?

steveb_2

Hi I'd not thought abut what fee would be appropriate really - I guess with the change in legislation, the IFA would have to work that way. As it is, I'm locked in, and the clawback does seem to be enforceable :-(
Thanks for help, all anyway.