Your IndustryJul 10 2014

Forester Life scraps commission and cuts out IFAs

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Forester Life has written to advisers informing them of plans to scrap commission on all ex-Children’s Mutual products and cut them out of future client correspondence.

A letter sent to advisers has revealed that, as part of “business transformation”, Forester Life had made “a number of difficult decisions” to meet “strategic objectives” following its takeover of Children’s Mutual in May last year.

The changes apply to child trust funds, growing-up bonds, unit-linked and with-profits endowments, the Friendly home bond, critical illness cover, life cover, Holloway sickness plans and replacement income cover.

All commission payments ceased on 30 April 2014 with advisers given a lump sum payment based on policies remaining in force until the policy maturity or expiry date or 30 April 2016, whichever is earlier.

A spokesman from Forester Life said the decision did not relate to the sunset clause on commission: “It was taken as it was in the best interests of our customers. The previous life and pensions business of The Children’s Mutual is a ring-fenced fund and therefore solely for the benefit of those policyholders.

“The commission payable to advisers was coming out of that ring-fenced fund, so we have done this for the benefit of the policyholders, as any advice they need to receive in the future requires them to pay a separate fee.”

He added that the accompanying decision not to refer clients back to their original adviser and to stop copying client correspondence to IFAs was as a result of “no longer holding” adviser details.

He said: “To ensure security of customer information, any requests for policy details are sent direct to the customer, who can discuss with their adviser in due course.”

Adviser view

Dave King, partner at East Kilbride-based Ask Independent Consultants and who has been directly affected by the move, said: “I have found that not only will Forester Life not release information to me on the phone regarding my clients’ plans, but they are refusing to accept information mandates from clients to release the details to us.

“How am I to maintain a professional IFA status when I cannot even get a valuation from a plan which I recommended the client to effect? I find it appalling.”