IFA firm want money back

[malandri]

Dear all,

I bought a Permanent Health Insurance (PHI)policy via an IFA firm 2.5 years ago. The policy was with Friends Provident, who paid commision to the IFA firm of about £550. I haven't heard from this IFA firm since nor I have used them for any of my other requirements as they were not very keen to do business I thought( I once emailed them that I wanted some advice on choosing a pension plan and they never came back to me). Anyway, 6 months ago, and since I became a father I decided to change my PHI policy and getting some more quotes from other IFAs and online, I chose a policy with UNUM. I therefore cancelled the Friends Provident policy.

Shortly after cancelling the policy, the IFA that arranged the Friends Provident policy for me 2.5 years ago sent me a letter saying that because I cancelled the policy, Friends Provident asked for a partial refund of the commision they paid to them (£350) and therefore , as per their terms of business that I signed 2.5 years ago, I have to pay them this money. In their copy of their terms of bussiness, I have indeed signed that

"if you subsequently cease to pay premiums on the policy and in consequence we are obliged to refund commision that has been paid to us, we reserve the right to charge you a fee based on no more then the amount of commision we are required to return to the company but we will not charge you a fee if you exercise the right to cancel the policy in accordance with the cancellation notice sent to you by the life office"

However, when I signed that, I thought that this was refering in the case where I do not meet my payment obligations towards the provider and therefore my policy is cancelled by them. I never thought that I would have to pay the IFA is in the future I decided to change provider. If they had put "If you subsequently decide to cancel your policy" instead of ""if you subsequently cease to pay premiums" I wouldn't have bought a policy via them or I would have made sure that I bought a policy from a provider that wouldn't ask for a refund of them if I cancelled.

I do not plan to pay them anything and I am about to seek legal advice about it. Anybody ever been in a similar situation? What did (or would) you do

Many thanks

malandri

[NotAllThere]

I think you'll find the IFA are perfectly within their rights, if the contract is written as you state. Let's say the premiums were £1000 a year. The IFA was entitled to commision say of 10%, for the first five years. Up-front the insurer pays the IFA £500. You cancel after three years. The insurer wants £200 back from the IFA. As stated in the contract.

IFAs don't work for nothing. They've worked out, following the above example, that it's worth to them £500 to provide your insurance. Why should they do the same work for £200 less? Would you?

If the contract is ambiguous, then you may find a way out. You could make them an offer. As it stands, it wouldn't surprise me if you have a legal debt toward them. You're a contractor, presumably? £250 isn't exactly a huge amount. In your situation, unless the contract clearly stated that I wasn't liable, I'd pay up. Seems fair. ( And that's not "fair" as defined by the current UK government ).

[malandri]

Well, £350 is not a huge amount, no, but I do not think I should pay it.

Nobody works for nothing but it looks to me that a lot of vital information was not given to me when this policy was sold to me: They didn't tell me that I would have to pay a portion of the commission if I canceled my policy, they didn't tell me that this specific provider would request commission back from them. If I knew either, I would have probably chosen another IFA or policy provider.

[Clippy]

Well, £350 is not a huge amount, no, but I do not think I should pay it.

Nobody works for nothing but it looks to me that a lot of vital information was not given to me when this policy was sold to me: They didn't tell me that I would have to pay a portion of the commission if I canceled my policy, they didn't tell me that this specific provider would request commission back from them. If I knew either, I would have probably chosen another IFA or policy provider.

This seems to have come about due to a change of your circumstances and I think, in all honesty, you probably still would have taken out the policy at the time even if the cancellation charges were pointed out to you.

After all, who knows what their circumstances are going to be in 2/3 years time, right.

That said, if I was in your situation, I would feel a bit peeved at having to pay this money back but as already mentioned, the IFA is within his rights to do so as it's how they earn their keep.

Personally, if t was me, I would stick the letter in the bin and see what happens.

Hopefully, they'll lose interest and not bother chasing.

If they do, cough up and move on.

[Sausage Surprise]

Watch out....the IFA will probably try to sell you an endowment policy to make up his shortfall......



bin the letter.....

[moorfield]

Yes, bin the letter.

[Turion]

Definitely don't pay! Contact CAB. Take time off work researching how to wriggle out paying the 350 in anyway possible. Hire solicitors, move house and go into hiding to avoid the debt collectors and bailiffs. You'll never need credit again anyway will you. Wife won't mind. She'll back you all the way!

On the otherhand.........You signed a legal document that stated you agreed to make up any loss the broker should suffer by not continuing to pay the premiums, so pay the £350 and move on is my advice. This is probably no more than a days pay. This is no different in principle to cancelling a gym membership or mobile phone contract mid-term.

[Waldorf]

Don't pay up!

I can't see that they would pursue it from you

[SueEllen]

Definitely don't pay! Contact CAB. Take time off work researching how to wriggle out paying the 350 in anyway possible. Hire solicitors, move house and go into hiding to avoid the debt collectors and bailiffs. You'll never need credit again anyway will you. Wife won't mind. She'll back you all the way!

On the otherhand.........You signed a legal document that stated you agreed to make up any loss the broker should suffer by not continuing to pay the premiums, so pay the £350 and move on is my advice. This is probably no more than a days pay. This is no different in principle to cancelling a gym membership or mobile phone contract mid-term.

Not strictly true the terms in any consumer contract you sign have to be "fair" and ambiguous terms can be found to be unfair.

Mobile phone and gym contracts have been investigated by consumer bodies and companies have been made to change them.

So either pay up, or if you are not risk adverse and have the time research the Unfair Terms in Consumer Contracts Regulations 1999 legislation, work out who you complain to in what order and how to write short complaint letters.

I've found that lots of companies will write of charges if it looks like you are quite happy to take them to their regulatory body and the cost of the charges is less then the amount it would cost them to contest your complaint.

[TheFaQQer]

"if you subsequently cease to pay premiums on the policy and in consequence we are obliged to refund commision that has been paid to us, we reserve the right to charge you a fee based on no more then the amount of commision we are required to return to the company but we will not charge you a fee if you exercise the right to cancel the policy in accordance with the cancellation notice sent to you by the life office"

Point out that since they have spelt "commission" wrong twice in the contract, you assume that the contract is void.