Consumers are less likely to surrender on some life and pensions products if they were sold to them by an IFA, data collected by the Financial Services Authority (FSA) suggests.
The latest figures for product persistency show that, apart from personal pensions, there is a higher frequency of lapses for policies sold by single tie representatives than those sold through independent advisers and by direct-offer advertisements.
This may be because policies selected from the whole of the market by independent intermediaries tend to be better matched to the needs of the client, the regulator noted, though it said it may also be because IFAs tend to advise those on higher incomes who may be more able to afford contributions.
Persistency rates for personal pensions - historically one of the lowest figures - did improve slightly among IFAs in 2012, with the four-year figure rising from 45.2% to 45.3%, though IFAs now fare worse than tied agents in this category.
The regulator said this may be explained by the higher proportion of pension policies written for groups of employees. More than 70% of IFAs' total personal pensions activity is now group business, the FSA data suggests, and, as this is linked to a particular employment, many policies will lapse when this changes and so lower persistency can be expected.
The FSA has been collecting product persistency data since 1995. Though there are several reasons why consumers lapse on life and pensions policies, such as poor product performance, the regulator believes lapse rates may also be indicative of the quality of advice given.
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