Legal & General (L&G) decided not to charge an hourly rate to clients using its restricted service because doing so could have done "dis-service" to them, according to the group's managing director for banks and building societies.
The life company has between 150 and 160 tied advisers in building societies around the country. It charges clients 3.6% initial with an ongoing charge of 0.65%.
However it only charges clients when they purchase a product, following research that clients would not pay an hourly rate for advice which did not end in a sale.
"An hourly rate could be doing a dis-service to clients as they may not take advice at all," said Chris Last.
"Our research found that customers would not pay an hourly fee if the outcome was that you don't need a product."
He said L&G advisers are paid on "productivity" and "outcomes", but denied that they would be swayed by incentives to sell one type of product over another, saying if they did choose unsuitable products they would lose their job.
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