Friends refunds commission after ‘legacy’ clawback error
Friend Provident has agreed to refund a commission clawback following complaints from an IFA, who has accused the provider of using a £200,000 critical illness claim to re-write business and withdraw his commission.
According to Peter Fyans, principle of Redhill-based Self Assured Consultancy, on 14 April the provider clawed back almost £8,000 worth of commission. Mr Fyans says he was only notified of the clawback when he received a letter from Friends Provident dated 15 April.
The provider has now rectified this, stating it was an “isolated error with this particular adviser” and was due to reinstating the policy following a claim.
The policy was an Axa combined life and critical illness policy, set up in January 2010 by Mr Fyans. In August 2011 the policy paid out £200,000 to one of the policy holders.
Friends Provident attributed this incident to a “legacy commission issue” related to the legacy Axa commission. A spokesperson said: “Where the policy had two elements - a CI and a life bit - and the policy is continuing with a life element intact, therefore the policy would be cancelled and re-instated.”
In September 2010, Resolution completed its acquisition of the Axa UK Life businesses and the combined business is now held by Friends Provident Holdings.
A spokesperson for Friends Provident confirmed that the clawback is in the process of being refunded.
He said: “His commission was clawed back due to the change in policy. This was an isolated error with this particular adviser and the clawback is in the process of being refunded.”
Mr Fyans said that the policy was billed as a two-member policy which was a multi-member arrangement.
He said: “I did not know that if one claim came along then the policy would be rearranged. Products should be as simple as possible and easy to administer.
“I would warn IFAs that if they have an Axa product that has since been taken over by Friends to watch out as Friends took the opportunity of a claim to rewrite a policy from a commission point of view two years later and upset the commission arrangement with other IFAs and my network.”
Alan Lakey, partner at Highclere Financial Services, was not surprised that there are admin issues, stating that Friends is an “amalgamation of three companies” so it is “no surprise there is a degree of confusion.
He said: “I can understand why that would happen but it is unfortunate as you need a dedicated person to deal with these issues. I have had administrative problems with various companies in the past and they come and go, but you look at that as a determinant.”