Adviser income could be hit by provider claw-backs

AXA and Friends Provident say consumers unsettled by the economic volatility may start lapsing their cover in a bid to tighten finances. Providers often pay advisers’ renewal commission in one up-front lump sum for either the first two or four years of a plan. But if consumers stop their cover, providers will ‘claw back’ part of that amount, hitting advisers’ income. Graham Harvey, managing director, protection, at AXA, says lapse rates, which also affect how providers calculate premiums, are typically around 10% each year. “I have not seen any evidence of [lapse rates going up] at the m...