Axa PPP under fire for terms of business

Andrew Oliver, founder of Kent-based advisory practice Andrew Oliver & Co, said he had been frustrated to receive the document, calling it "excessive".

It related to only one client whose policy renewal commission was a mere £10.50 a month.

He commented: "A 'reasons why' letter sent to one of my clients at 31 pages long would most likely not get read by the client.

"How many IFAs are really going to read  and fully digest and understand the implications of what they are signing? Or perhaps that’s the aim."

He declined to sign it on grounds of time and cost, so will not be getting any commission from that policy.

The policy in question was for a client with a legacy Permanent Health Company (PHC) policy. This was a firm Axa PPP Healthcare took over in 2015. 

The indemnity is designed to compensate us for losses we suffer (usually financial) as a result of actions taken by our intermediary partners that are outside of our control. Paul Moulton

Mr Oliver had been contacted by Axa PPP Healthcare, explaining the PHC was beginning to discontinue some of its older plans and transfer the affected members onto Axa PPP healthcare policies at the next renewal. 

In the communication, he was told that, as he didn't have a business relationship with Axa PPP, he was being "invited to establish terms of business so there won’t be any disruption to the management of your clients’ policies or the commission payments you receive".

Mr Oliver emailed the provider to express concern about the length of the document.

In his communication, seen by FTAdviser, Mr Oliver wrote: "We feel that a terms of business that is 31 pages long is a burden and a cost to us for the time that it would take to read and understand.

"If there were within the terms of business any parts to which we were not in agreement, this would not be a document to which we could negotiate and amend the terms to an agreement acceptable to both parties.

"I suspect I would need to allow at least an hour just to read the document, assuming that I fully understood and agreed with the content and did not need to take reference or refer to my compliance department."

He explained that the firm's professional rate is £150 an hour which meant it would cost him at least £150 to read a document that is "essentially being forced upon us to enable us to submit health care business with Axa or to receive the renewal commission from the one policy that we had for a client with PHC".

According to Mr Oliver, as the renewal commission on that one policy is £10.58 a month, this would mean the firm would have to receive renewal commission for 14 months to cover the cost of the time to read this document. He opted not to sign the document - and may therefore not get commission on the policy.

Paul Moulton, intermediary propositions director for Axa PPP Healthcare, defended the length of the terms of business document, citing the need for appropriate safeguards for both the adviser and the client. 

Mr Moulton commented: "We believe strongly that our terms of business for an agency agreement are, necessarily, thorough in order to ensure that they properly meet the business needs and provide the necessary protections to safeguard the interests both of the intermediaries we recognise to advise clients on our healthcare cover and of ourselves."

Mr Oliver said it was not the first time he had received a weighty document from the insurance provider.

He explained he had once been approached by Axa PPP Healthcare with a view to being an introducer, but was turned off by the length of the document and the restrictions and provisions within it.

Specifically, he criticised the indemnification clause within the terms and conditions. Mr Oliver said: "The company did approach us some time back to be introducers for Healthcare but the agreement had wording in it that wanted us to indemnify them with regards to any complaints against them.

However, Mr Moulton said such provisions were "commonplace" and served to protect the provider and the end client.

He explained: "It is commonplace for indemnities to be sought under corporate/commercial agreements and Axa PPP Healthcare seeks an indemnity from all of its intermediary partners. The indemnity is designed to compensate us for losses we suffer (usually financial) as a result of actions taken by our intermediary partners that are outside of our control.

"Examples of this may be where an intermediary mis-sells an insurance policy which they place with us or, for introducers, where they fail to secure the necessary permissions from clients for us to contact them as prospective customers as required by the data protection laws.

"If a legal claim is brought against us by a customer as a result, Axa should reasonably expect to pass on our loss to the responsible party."

simoney.kyriakou@ft.com