Legal and General is piloting a scheme whereby it contacts clients directly and allows them to bring their insurance policies into force without instruction from their IFA.
The scheme came to light when one IFA issued an instruction on behalf of a client to not yet commence their policy, or in industry parlance put the policy ‘on risk’.
However, the client later received a text from L&G asking if they wanted to do just that. Thinking the adviser must have instructed them to do so, the client acquiesced and agreed to a 1 January start date.
The insurer subsequently cancelled their old policy, leaving the client uninsured for the better part of a month.
Alex Whitman, director of Surrey-based IFA Whitman Fry, told FTAdviser his colleague had advised the customer to hold off commencing their new insurance policy.
He said: “Why are they dealing with our clients direct? More importantly, why are they giving advice? What would have happened if the client died? We would have been sued probably.
“There are other things going on in the background that L&G have no knowledge of. I have never known a life company to say ‘can we start a scheme’.”
Mr Whitman added that since the incident L&G has “backpedalled” and put the schemes back in place as initially instructed by the adviser, and that he is happy with the resolution.
A spokesperson from L&G told FTAdviser: “We have been piloting a proactive pipeline initiative to ensure customers have the ability to put their policies on risk, by simply providing us with a start date where we don’t already have one, without having to bother their IFA.
“We have also been sending a number of ‘information only’ texts that go to IFA customers prompting them to get in touch with their adviser.
“We have received very positive feedback from this initiative by advisers and customers, and approximately 20 to 30 reponses per day, from customers providing start dates.”
She added that customers have the choice of texting the start date directly to L&G or to the adviser as well.
“In the case of this broker, he had given instructions to us not to start the policy, following our call to him, and he was impressed with that service.
“Unfortunately, the customer texted us directly and the broker was not notified so he thought we had disregarded his instructions.
“This misunderstanding has now been resolved, but we will continue to monitor this very closely to ensure this remains an isolated incident.”