Life Insurance cancelled - Financial advisor demanding more fee's

andyburge36

Hi all,
I live with my parents and they have recently taken out a life time mortgage through a financial advisor who also said I should take out life insurance to cover the equity release if anything was to happen to me (I am going to pay the interest on the mortgage for them). They are using the money to build an extension which will obviously increase the value of their property.

The insurance was at the stage where they were requesting a medical report from my GP which they didnt ask me to consent if I wanted to release the report to them before seeing it first (against GDPR). I have decided to not take up this insurance, mainly because I have insurance through my employer and my parent also have some type of life assurance policy.

This morning I have received an email from the financial advisor stating that I need to pay him an extra fee of £400 because I'm not going for the insurance and that the costing for the case was done on the basis of processing a equity release mortgage and life cover and that he has already paid his admin to process this. He attached his fee note for the £400 and told me to pay in the next few days.,

It just doesnt sit right with me. Obviously the insurer could of come back following medical report and said they would need to charge more for example, and I would of decline the policy at this point anyway. Also, this is my parents equity release and its not part of the agreement that the interest HAS to be paid as the life time mortgage gets taken out of the property when that time comes anyway.
Surely once the insurance is set up I could cancel it at any point anyway, would he expect a fee then?

Is he pulling a fast one on me or can he enforce this charge?

any advice is greatly appreciated 

thanks

kingstreet

What does the signed fee agreement say?

andyburge36

I dont have a signed agreement sorry. I haven't even received any paper work regarding the policy

dunstonh

This morning I have received an email from the financial advisor stating that I need to pay him an extra fee of £400 because I'm not going for the insurance and that the costing for the case was done on the basis of processing a equity release mortgage and life cover and that he has already paid his admin to process this. He attached his fee note for the £400 and told me to pay in the next few days.,

Charging like that is allowed but it should be through agreement.

Ask for a copy of the fee agreement signed by you that shows this detail.

It does seem a bit suspect that life assurance would be needed on you for the reasons given.

Surely once the insurance is set up I could cancel it at any point anyway, would he expect a fee then?

Usually, yes.  Commission used to offset an explicit fee is allowed.  If you create a clawback then going after you for the difference is allowed.    However, the fee agreement should state this and the commission obtained should match the fee.  It shouldn't be an undisclosed figure and they shouldn't take more commission than the fee agreed.

Is he pulling a fast one on me or can he enforce this charge?

It depends on the fee agreement.

andyburge36

Thanks so much for replying.
I have challenged it as there was no fee agreement that I signed and also the one for my parents didnt have it on, so he's backed off and said it doesnt need to be paid.

Appreciate your help, thank you! 

kingstreet

andyburge36 said:

Thanks so much for replying.
I have challenged it as there was no fee agreement that I signed and also the one for my parents didnt have it on, so he's backed off and said it doesnt need to be paid.

Appreciate your help, thank you! 

That's what I suspected when I asked what the signed fee agreement said. Your answer was just what I hoped for/expected.