Aegon has once again come under pressure over its approach to removing agency relationships after its complaints department told an intermediary the firm would not consult prior to ending an adviser’s relationship with a client - seven weeks after it has pledged to revise its policy.
The firm had responded to a complaint from financial adviser Mark Smith, of Mark Smith Wealth Management Ltd, who discovered in August that his agency had been removed in relation to two clients with Aegon investment bonds and that trail commission payments had ceased as of April.
When Mr Smith complained that he had not been contacted prior to the decision - which also prevents him managing the clients’ investments - the complaints department informed him “there is no obligation on us to consult either the intermediary or the client” prior to revoking agency rights.
Seven weeks prior to this contact in June of this year, Aegon told FTAdviser that in the future it will always inform the adviser and client if it believes there is no ongoing advice relationship between them, following an adviser complaint over agency termination.
In that case, Kevin Hopwood, managing director of Hopwood Ash Financial Planning Consultancy, was similarly removed as the adviser to two clients with Aegon investment bonds set up more than five years previously.
Aegon said at the time: “In future, we will notify advisers and customers if we have reason to believe there is no longer an ongoing advice relationship. There is no question of us intentionally removing an agency from a policy where there is ongoing advice.
“If for any reason we remove an agency and find there is an ongoing advice relationship, we will reinstate the agency.”
A spokesperson for Aegon stated that the agency was removed in Mr Smith’s case in February of this year and thus was not caught by the policy change.
However, in the response to Mr Smith the firm makes no reference to the policy change and states it retains a contractual right to terminate agency.
It stated that where there is no longer an ongoing ongoing customer/adviser relationship “we may stop trail commission payments and remove servicing rights” and that “there is no obligation on us to consult either the intermediary or the client”. It added that “this is not a frequent occurrence or ‘wholesale’ policy”.
Mr Smith was told that Aegon believed he no longer had an ongoing relationship with the clients as he had not assessed information from the Aegon website for a significant period of time.
Mr Smith complained to Aegon in writing, questioning why there is a link between accessing the Aegon website and having an ongoing relationship with the client, as well as why Aegon did not inform him and whether the clients’ charges were reduced to reflect the trail being stopped.
In an email to Mr Smith, Aegon said: “We have a contractual right to take a view on whether the intermediary is still servicing the client based on, amongst other things, intermediary activity. There is no obligation on us to consult either the intermediary or the client. By submitting business, the Intermediary has agreed to do so subject to these terms of business.”
Other life and pensions firms have also come under fire for terminating adviser relationships. Most recently, Scottish Widows said if advisers fail to provide ongoing service to their clients, it will stop paying adviser charges and will clawback adviser charging paid by it.
In an interview with FTAdviser, adviser Andrew Gardner, partner at Paul Young Independent Financial Advisers, said: “There has been plenty of evidence of IFAs being dropped as the agent of a customer simply because the client called the provider directly on a particular issue. I think there will be a lot more of this as time goes on.
“I guess the best way to monitor this is track every piece of trail commission that we expect to receive in order that we can identify when it suddenly stops. We can then contact the client to see if it was really their intention to remove us as their agent.”
