Life Insurance Commission Reclaim

sbez_2

Hi. I bought a property in June 2005 with a mortgage of just under £170k we bought level term insurance through a financial advisor (the same guy that sorted out our mortage).

In Sept 2007, we borrowed some additional money on the house and I wanted to increase my life insurance. I didn't have the updated contact details of the company that the financial advisor worked for and it had also changed names, so I couldn't track him down. I went direct to the insurer (Norwich Union) who informed me that I would have to get a new level term policy for the increase sum assured. So, I cancelled the policy and found a better deal with Legal and General.

A few weeks later I got a letter from the company that organised my initial life policy that I was liable for the commission that was reclaimed from them by Norwich Union. They provided a copy of an agreement that I had signed
stating that I would be liable for commission reclaimed if I cancelled the policy. They want me to pay around £220 to them.

Is this standard business practice? It's seems bizarre that I am effectively chained to this company/policy even though it no longer meets my coverage needs. I'm not denying that I signed the agreement, but I had no idea that after 2 years, I would still be liable for anywhere near that amount.

Any advice would be greatly appreciated.

dunstonh

Is this standard business practice?

No. However, it is a bad practice that a minority employ. It is only enforceable if they got you to sign something to agree it.

sbez_2

Thanks for the reply. I guess I'm stuck then...a good lesson to learn I suppose!