Robbie Constance, partner in regulatory law at City law firm Reynolds Porter Chamberlain, said that through its actions the Edinburgh-based insurer might be “misinterpreting the rules” by removing servicing rights for those advisers who have been out of contact for 12 months.
He said advisers have not been obliged to contact their clients regarding long-term policies under Cobs 6.1A rules on adviser charging and remuneration in the FCA handbook.
Mr Constance said: “Aegon UK might think that it is not treating customers fairly to continue to reward advisers when no ongoing service is being provided, but I am not sure that is supported by the rules, as old trail can clearly still be paid if the adviser is under no obligation to contact clients over policies.”
A spokesman for Aegon UK said: “We have not written to customers based on an interpretation of Cobs 6.1, we’ve done it in response to a clear market trend since the RDR that some clients are moving into a non-advised status without us always knowing that has happened. The action has been taken in line with our terms of business.”
Christopher Green, director at Nottinghamshire-based Alexander Green & Services, said he “blasted” Aegon UK with phone calls after trail was removed on a client’s personal pension contract. Mr Green said his clients are updated through back-office systems.
He said: “I asked Aegon to send me an up-to-date statement to maintain the relationship. Advisers now have to spend time pestering Aegon’s customer service centre, and it seems silly that, simply by asking for a valuation to be sent out, the agreement remains intact.”
Mike Wainwright, partner in regulatory law at law firm Dentons, said the insurer would feel justified in taking its action even if the advisory relationship were continuing, as it would not wish to pay out commission to firms that may have agreed separate explicit fees with clients post-RDR.
Aegon UK confirmed that it would be “reinvesting” implicit commission removed from policies while lowering charges for customers previously in explicit commission contracts, which will be reflected in the clients’ statements.
The removal of servicing rights on policies where the adviser has not contacted Aegon UK for a year came just one year after its chief executive pledged “not to bite the hand that feeds” on trail.
Speaking in September last year, Adrian Grace said: “We started with IFAs. IFAs are our life blood. We will not do anything that harms our relationship with the IFA community. Why would we bite the hand that feeds us? It is the simple ABC of business – if the adviser deserves the trail they get it.”
When asked if the move last week meant Aegon UK had changed its mind, the spokesman said: “We have not changed our mind. If advisers believe there has been a mistake we will happily reinstate them, subject to confirmation from the customer.”
The spokesman added: “Since the implementation of RDR we have received an increased number of calls from customers without an adviser and are investing across the business to ensure we are able to meet these customer’s needs.”