Should you be concerned over life office client contact?

Ashley Wassall

I’m showing my age a little here, but this week I was put in mind of the Nirvana song ‘Territorial Pissings’ from the band’s seminal album ‘Nevermind’, which features the line: “Just because you’re paranoid, don’t mean they’re not after you.”

I was reminded of the lyric after FTAdviser published two stories relating to the mounting concern over life office Aegon’s client contact policies.

In the first case, the insurer’s complaints department defended its decision to end the adviser’s agency relationship with a client holding two Aegon investment bonds without consulting the intermediary, stating it has no contractual obligation to make contact prior to doing so - despite the insurer saying seven weeks ago that it had revised its policy in this area.

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In another case, an adviser raised concern over 12-week annuity letters sent by the firm which give primacy to a page one push for its advisory subsidiary Origen’s service and contain no reference whatsoever to the existing advisory relationship. On this occasion the complaints department again said the firm’s policy had changed, but a spokesperson seemed to confirm this would only mean the information about seeking advice generally is being bumped up the letter order.

This is by far not the first time we’ve seen this in relation to a number of other providers, in most cases also life offices. Indeed just last week we published a story that raised concern over a change to Scottish Widows’ terms of business which one adviser said reveals it sees adviser client books as “their customers”.

It’s easy to see why advisers are worried, but is their concern justified?

Aegon, for example, states that it has a requirement to ensure ongoing service is still being provided. Presumably, they might add, it is not economically viable to do so by other than the clumsy means it has thus far, such as checking how many times you’ve accessed its website.

I’d say that just because there might seem to be a hint of paranoia, that does not mean they are not, in fact, after your clients.

Clients move, liabilities do not

Another key theme that re-emerged was that of the disparity in transference treatment between the liabilities of failed advisers and the client books.

This week adviser firm 20Twenty Independent, which specialised in advice in relation to controversial film schemes and had previous been on the wrong end of a major ombudsman ruling, was confirmed as having entered liquidation. FTAdviser revealed, however, that many of its staff and clients have moved to an associated firm, Totus Capital.

It’s not the same as ‘phoenixing’ as the latter firm has been in existence for some time, but it shares some of the characteristics.

In her column for FTAdviser sister title Financial Adviser this week, Gill Cardy, chief executive of IFA Centre, said phoenixing will continue all the time we have laws that allow it and a lack of protection for advisers due to the lack of a long-stop.