Legal & General has warned that advisers could be vulnerable to complaints action is they fail to ensure that business protection clients have completed the correct legal paperwork.
It feared that if intermediaries did not confirm shareholder protection clients had completed a cross option agreement to enforce the purchase of shares by a dead person's business partner they could be held responsible.
Speaking at the COVER Health and Protection Forum, Clare Harrop, head of specialist protection at Legal & General, voiced her concerns on the matter and unveiled the provider's new legal support service.
The fixed price menu for business protection legal services is part of an exclusive agreement with Lifetime Legal Services that was launched at the Forum.
Harrop highlighted the importance of clients completing business protection paperwork revealed following research by the insurer.
"Regarding the legal side of it, advisers say that clients don't understand the ramifications of having the share holders agreements aligned with the articles of association," she said.
"But are advisers telling them that?
"Because if there's a claim and the policy is paid out in trust, there's nothing legally to say that money has to be used to buy those shares, and as an adviser, is that going to protect you if a complaint comes in?" she added.
Harrop said the new service had been arranged to fill this gap and support advisers who may not have existing legal professional connections in place.
Services offered include:
- addressing the Articles of association,
- review of existing shareholder agreements in place,
- and drafting new shareholder agreements.
It also includes guaranteed service levels with a turnaround time of between one and five days.
