Advisers believe Prudential is not giving clients a fair deal
Clients who did not have their applications honoured when Prudential withdrew its guaranteed critical illness (CI) rate in April will receive no cash compensation for the service blunder.
Despite outrage from the broker community over Prudential's decision to refuse to honour applications awaiting processing, the provider is offering just two month's free cover to would-be customers and a £75 re-broking fee to advisers.
Intermediaries have knocked this latest decision, saying the provider has taken an unfair approach to clients.
'There is no point offering clients two months' free cover when they may have to pay twice the original premium for the next 25 years,' said Kevin Carr, senior technical manager at LifeSearch.
Carr said regulation must be put in place to ensure the same problems do not reoccur. 'We have been talking to the FSA, but it is says it is not its concern until 2005 when it becomes the official regulator. However, we feel it is the FSA's job to look after consumers' interests.'
Jason King, director of life Policies Direct, agreed: 'Does this not beg the question that further regulation is required to protect the consumer?' he said.
LifeSearch has been threat- ening to take legal action with Prudential over the debacle, but Carr said it might now be unable to afford to proceed: 'Unfortunately Prud- ential's pockets run much deeper than ours.'
There has been market speculation Prudential is to pull out of the UK IFA protection market altogether, however Darragh Leeson, spokesperson for Prudential, denied the rumours. 'We are still offering protection products and will continue to write business in these markets ' we have no plans to pull out,' he said.
Leeson confirmed three senior members of staff ' Richard Field, director of product develop- ment, Richard Taylor, director of pensions and protection, and Keith Bevan, senior protection product manager ' had resigned, but did not confirm if this was in connection with the CI problems. 'I cannot discuss the reasons or personal details of any case,' he said.
Meanwhile, BUPA has struck a deal with adviser networks, including Bankhall and Personal Touch Insurance, to take on Prudential's original unpro- cessed application forms with the offer of a guaranteed rate premium. However, clients will still have to pay more for cover than the original Prudential rate and submit supporting information with a new medical declaration
Martin Noone, head of intermediary sales at BUPA, said he was confident this offer would not cause further backlogs: 'I would rather not say what our maximum capability is, but we have agreed to process a certain percentage of the business and we believe we can cope with that volume.'
