Insurance advisers warned against cancellation cash grabs
The warning comes from Financial Services Complaints Ltd. (FSCL) chief executive Susan Taylor, who said the disputes resolution scheme had dealt with 10 cases where an adviser had attempted to charge clients substantial fees when cancelling a policy within the first two years.
“It’s not necessarily reasonable to charge an amount equivalent to the two years commission that the adviser will lose, because we’ve seen instances where they’ve basically said we’ve lost $3,000 worth of commission so that’s the fee.”
“We have seen cases where they’ve [the client] been charged several thousand dollars,” Taylor said.
She said that while charging a cancellation fee was perfectly legitimate, advisers risked problems if such a fee was not adequately disclosed or relative to the service they provided the client in obtaining the cover.
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