Keeping an eye on trail commission refunds
Can I suggest advisers check that Aviva (and no doubt other companies) actually do reimburse the client for trail commission and stop making deductions from the policy when ongoing payments to advisers cease?
When I retired a couple of years ago, I tried to get Aviva to reinvest the trail commission of £800 a year back into the policy (an old investment bond that couldn’t be encashed because of the higher rate tax charge). Aviva refused, and the Financial Ombudsman Service upheld the refusal, and so Aviva pocketed the money.
What would happen if the Financial Conduct Authority imposed a ban on trail, but didn’t insist (thereby supporting the FOS’s point of view) the clients did not need to benefit from the money? The insurance companies would have larger profits.
Time for a clean-up
All trail should have been switched off after the introduction of the retail distribution review. Don’t talk to me of contracts – it was (and still) is high time the industry was cleaned up.
We had customer-agreed remuneration. If you were too guilty to contact the client on this basis it shows that you were scamming them and even you yourself were not convinced you were entitled to it.
The simplest way was just to tell the client that what the provider used to deduct automatically you will now invoice for directly, and of course explain why the charge is justified. I had no problems and I was only a one-man-band, so I really don’t see why other firms would regard this as unfeasible.
Indeed, nowadays you have to provide quarterly valuations to boot.
Problem of financial abuse
It is interesting that advisers are being urged to watch out for signs of financial abuse (‘Advisers urged to watch for signs of financial abuse’, see page six).
This will be a familiar situation with most advisers and usually the male partner in a relationship will be the one calling all the shots.
The problem is that it is easy to identify financial abuse, but what does an adviser do with the information if they have suspicions? Who do you report it to?
The police will not be interested unless you have irrefutable cast-iron evidence.
The adviser also runs the risk of enraging the male partner and it ends in a complaint situation.
The easiest way for an adviser to deal with a financial abuse situation is not to deal with the clients if they suspect financial abuse – but that does not solve the problem.
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Thanks for your article about unregulated introducers for pension transfers (‘Pension transfer into Dubai property costs adviser’, Jan 6).