Providers amending terms of business to steal clients: IFA

Scottish Widows’ new terms of business for intermediaries is further evidence that providers are trying to take business away from advisers, an IFA has said.

In an email to advisers, dated 30 October, Scottish Widows states that if advisers fail to provide ongoing service to their clients, it will stop paying adviser charges and will clawback adviser charging paid by the provider.

The email states the new terms will come into effect immediately and any new business submitted will automatically confirm acceptance of its new terms of business.

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In an interview to be published later today (1 November), Andrew Gardner, partner at Paul Young Independent Financial Advisers, said the terms made a “shocking” read.

The terms said: “Where we have agreed to faciliate the payment of an adviser charge on the basis that you will provide an ongoing service we shall cease to facilitate such payment in the event that you cease to provide an ongoing service to your client.

“You must notify us immediately where you cease to provide an ongoing service (for any reason) in circumstances where we facilitate the payment of adviser charges in respect of that ongoing service and you shall indemnify us in respect of any costs and losses suffered by us arising from a failure by you to make such notification. You shall repay to us any adviser charges paid by us to you in respect of any period where you were not providing an ongoing service.”

The terms go on to add that where Scottish Widows has agreed to faciliate adviser charging on the basis that there are regular payments, this shall also cease if the regular payments stop.

Mr Gardner said his greatest concern is that providers now see “our client book as their customers and will be applying every trick in the book to try take them from us, and this has been reinforced by Scottish Widows recent change to their terms of business”.

He said: “I suggest you read [Scottish Widows’ new terms and conditions for intermediaries] in detail if you have not done so.

“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.”

A spokesperson for Scottish Widows said: “The terms of the adviser charging rules are compliant with those set by the FCA.

“If a customer comes direct to Scottish Widows, we will always ask if they have an adviser. If they do not and they wish to deal with us direct we will of course help them with their financial needs.”