Premier Protection is a new network for independent financial advisers (IFAs) that has caused some controversy in the industry because of its advertising campaign.
It promoted itself as a compliance-free network and promised intermediaries good rates of commission. But its emphasis on how intermediaries could avoid General Insurance Standards Council (GISC) compliance and sell unregulated products has caused one of its insurer partners to jump ship.
Legal & General believed the campaign was conveying the wrong message. Business partnerships director Duncan Crocker explains: “We work to high business standards for the sale of all retail financial products including life protection. Those firms that find this approach too onerous will have to look to do business elsewhere.”
But Premier Protection’s two directors, Michael Cooke and Darren Ferneyhough, say: “We support their stance. But people haven’t thought it through. Many don’t understand how we work.”
Premier Protection was launched in March and ran for three months before halting to take stock of what it had learned and identify improvements to the service.
The network specialises in protection products including income protection (IP), critical illness (CI) and term assurance from five insurers: Scottish Provident, Unum, Cornhill Life, Skandia Life and Zurich.
Following the July relaunch, the network has 70 member companies. Cooke says: “We’re bigger than ever, with a website, which conveys the message we want to give to the marketplace.”
He adds that his company is aiming to clean up standards by ensuring all members adhere to the Association of British Insurers’ (ABI) code of conduct, which he says is “good common-sense business practice”.
He says: “It’s a way of getting what’s right for the client. The advice is regulated by the ABI. We expect high standards from our members and as such we’re leading the way in the marketplace.”
The idea for Premier Protection was borne after Cooke’s return from working in Kuwait and Shanghai where similar products, including investments, were not regulated.
He came back to Britain and discovered he could sell products without Financial Services Authority (FSA) approval, as long as they were not investment backed.
He explains: “A number of insurers impose rules on intermediaries which are perceived as regulation. I questioned this and dug deeper to find the facts. I could have joined a network but decided that wasn’t the way. I could still sell without signing up to the FSA.” He then set up in business with Ferneyhough, who is the technical brains behind the website.
Cooke animatedly describes the arduous task of the paperwork involved in providing quotes for FSA-regulated products, such as the compulsory fact-find for the client comprising 35 pages, “which takes two hours”. Forms are then completed, followed by a “reasons why” letter, after which photocopies of everything need to be made and submitted to the network.
He says: “And then it takes the FSA weeks and months to assess the advice an adviser gives is correct. It costs more money than you’re likely to earn in commission so there’s no incentive there.”
He adds: “But that doesn’t mean our new venture is a cop-out and that it’s about avoiding compliance. This network is a breath of fresh air.”
“The appealing thing is that intermediaries can focus more on what the client wants, they have a better understanding of what to recommend instead of the time-consuming bureaucracy. This means the IFA will be paid quicker and it’s a much better business proposition.”
Premier Protection is not content to work solely with IP, CI and life insurance products so has signed a deal with Yeovil-based Essential Health, a national network of private medical insurance (PMI) intermediaries.
Cooke believes everyone should be talking to clients about all the health insurance products because he says CI exclusions can be picked up in a PMI policy.
Paul Walker, the managing director of Essential Health, explains that his company is already a GISC member so other intermediaries reluctant to join don’t have to.
Cooke explains how the marriage works: “The amount of PMI work I do doesn’t justify joining the GISC and I don’t want to be regulated. But a PMI intermediary gives us a conduit to do business.”
Whenever a client requests more information about PMI, members of Premier Protection can pass them a business card with details of an Essential Health intermediary. At the same time, this keeps the client happy by providing help under one roof.
Cooke says: “Paul would pay me a fee for introducing that client to his business while still earning commission. And I’ll earn something when the client renews the policy. That way everyone is happy, and it’s a win-win situation.”