Many advisers who quit investment business after RDR moved over to selling protection cover where commission payments, possibly as much as 90 per cent of the first year’s premium, remain. But where do they find the clients they need once they have exhausted their old databank?
A number have turned to cold-calling. Others have put their faith – and cash – into lead generation websites, many beyond the regulatory radar. But this still largely unnoticed area could lead to reputational loss, as well as costs.
As a consumer, I was recently phoned by an Indian call centre. It asked for Mr Oliver – no such person exists although my son’s first name is Oliver. The caller said he was from “the Insurance Advice Centre” and had “access to all major advisers and insurances”. He asked my age, whether I smoked, and whether I wanted a family, joint or single life policy.
A second call centre employee said his firm was “independent and had a licence to conduct a review of every life insurance company in the UK”.
Showing interest, I was then immediately put through to “one of our advisers in the UK”. This was Glasgow-based Your Life Direct which already had my details and later told me Insurance Advice Centre was a lead generation company.
According to the FCA register, Your Life Direct is a trading name of Another Life Ltd, which, Companies House records show, has one director, Paul David Kopec, aged 37. Companies House documents also show that Mr Kopec was, between November 2003 and March 2011, a director of Voicestream, a UK company with Indian call centre interests. Voicestream went into compulsory liquidation in July 2012.
Your Life Direct is an appointed representative of Sesame Bankhall, fined £6m by the FCA in June 2013 for, among other items, “a failing in the system and controls that governed the oversight of its appointed representatives”.
Sesame Bankhall said: “Appointed representatives that are members of the Sesame Network are required to adhere to all regulatory requirements in relation to the way they market their services. Our member firms are expected to conduct appropriate due diligence on any business that may introduce customers. This includes only working with firms that have all the necessary FCA authorisations.
“We regularly inspect our appointed representative firms, and within that inspection, we would normally review the firm’s practices and controls in respect of lead generation.”
The FCA said: “There are no cold-calling restrictions for general insurance business, although firms must consider the need to be fair, clear and not misleading in all communications.”
Online there are some 20 unregulated sites promising quotes on complex protection policies such as private medical insurance, critical illness and long-term income protection “within 30 seconds”.
Some ‘borrow’ the names of legitimate brokers. Googling , for instance, ‘Anglia Healthcare’, a regulated PMI specialist, produces the unregulated Healthquotesonline website in prime position. It said: “Compare Anglia health plans, get the cheapest quote online now!”
Only sharp-eyed potential clients notice the word ‘ad’. This exercise can be repeated with many other brokerages.