From: "Rhoy the Bhoy" 
Newsgroups: uk.finance uk.legal
Subject: Re: Advice on IFA
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Date: Sat, 13 Dec 2003 12:03:04 -0000

Jonathan wrote:
> "Jonathan"  wrote in message
> news:...
>> I don't know if this is significant, but did you sign a contract
>> with him for his services? If so then what does/did it say? If
>> not, then I think I'd get some legal advice.
>>
>> You could try posting on uk.legal, or even try calling a solicitor
>> out of the phone book - they might give you a simple yes or no as
>> to whether you are obliged to pay, although I think these days
>> many won't have any conversation about anything legal unless the
>> meter's ticking.
>>
>> JJ
>
> His terms of business state:
>
> "If we arrange a policy for you and do not charge a fee for our
> services, we will receive commission from the policy provider.  If
> you subsequently cease to pay premiums on the policy and in
> consequence we are obliged to refund the commission, we reserve the
> right to charge a fee equivalent to the amount of commission
> reclaimed by the policy provider.  If we recommend to you any
> policy to which this clause applies, we will at the same time
> inform you in writing the maximum of any such fee and the latest
> time at which we would charge it."
>
> and the policy recommendation states,
>
> "...I recommend [company name] as they meet your requirements to
> insure with a well respected company, with good financial strength
> and competitive premiums.  In addition this policy has a great deal
> of flexibility enabling you to add people in or take people out,
> alter the balance of your cover etc etc."
>
> "You have elected to pay for the advice which you have received from
> [IFA name] by allowing [company name] to pay commission to [IFA
> name].  This commission, however, is not fully earned for 48
> months.  If you cancel the policy during that period [company name]
> will reclaim from [IFA name] the commission which has not been
> earned.  The latest time at which a charge could be made is up to
> the end of the initial earnings period.  For this reason our terms
> of business reserves the right to charge you a fee for stopping
> premiums the amount would be decided by the number of months left
> to reach month 48.  The chargeable amount reduces over the earnings
> period."
>
> Neither of which, I think, covers the possibility of an amendment
> to a policy.  Therefore his arguement doesn't seem exactly water
> tight, does it?

IIRC the FSA is hostile to this kind of consumer treatment.

(uk.legal added)