Canada Life accused of dictating advice fee

Canada Life accused of dictating advice fee

An adviser has complained to Canada Life after the life and pensions provider "dictated" what his advisory fee should be to his client.

Wolverhampton-based Julian Pruggmayer, founder of Financial Risk Management, said he had arranged a policy renewal for a long-standing client with Canada Life but when the renewal papers for the case were issued the quotation supplied to the client contained a figure for the adviser's fees.

Mr Pruggmayer claimed this figure had been "dreamed up by someone at Canada Life without consulting our office as to how much work we had undertaken, or how much our fee structure was. It effectively planted a figure in the client's mind."

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Mr Pruggmayer wrote to Canada Life stating: "We have undertaken a lot of work for this client which he requested was taken from this policy at renewal. I understand from you that Canada Life suggested it cannot pay more than 3.5 per cent of the fund towards our fees.

"But when this policy was first set up, the payment was 5 per cent."

The recipient of the complaint referred the case to Canada Life's compliance department, for which Mr Pruggmayer said he was "grateful" but asked: "Please do tell me just what business it is of [Canada Life's] as to how much we charge clients, and the manner in which the client chooses to have us remunerated?"

According to Mr Pruggmayer, providers do not have the authority to suggest adviser fees to the clients; the provider only has remit over the pricing of their own policies, investments and pension schemes.

A spokesman for Canada Life said: "Our duty to ensure successful customer outcome is of the utmost importance to us, which is why we asked Mr Pruggmayer for further information after we received the unusually high fee rate requests for this account at the five-year review point.

"In this case, the rates requested had approximately doubled – increasing to 6 per cent of the fund - from what had been charged in previous renewals, and not counting an application for a further ongoing fee."

The spokesman for the provider said that, given this would potentially have a significant impact on the customers' investment, Canada Life felt it was in the customer's interest to request further information.

The spokesman continued: "At no point did we deny Mr Pruggmayer's request and, just as we have done on the rare occasions where similar events have occurred with other customers, we would have agreed the rates when provided with suitable information."

However, Mr Pruggmayer argued it was not the provider's business to inquire as to how an adviser is remunerated by his or her clients or to dictate a suggested fee.