I am in business as an independent financial advisor now for a long time. When I started my own business back in the early 1970’s many bank managers had their own life insurance agencies. Some were really active and every time one of their customers was looking for a loan for a car or a business they suggested/recommended/implied that the customer might like to take out a life insurance policy with the representative of the life insurance company with whom they had an agency. They didn’t give any advice they simply called their insurance man.

When the business was done they then received the commission, the insurance company representative did all the work. The bank manager made the introduction and received the commission.

When we are looking for a loan and the provider of the loan suggests we take out an insurance policy with whoever they recommend it is very difficult to say no. As a result in most cases we will agree and go along as we even if we are not particularly happy about it. We need the loan and don’t know if we will be able to get one elsewhere.

This couldn’t happen today I hear you say. Well it could and it is still happening and it is a serious conflict of interest and it should be stopped.

In the middle of Ireland’s recent banking financial crisis I wrote a letter to the Irish financial regulator at the time Matthew Elderfield to suggest that this could be the time to simply stop banks from providing financial services to their customers because of the obvious conflict of interest. He didn’t reply himself but got one of his colleagues to write to me basically to say that really nothing much was going to change.

I thought that was outrageous and still do.

A few years ago my daughter Nora happened to have a few quid on deposit in our local bank (money since well spent!). On a routine visit to her bank she was approached by an in-house advisor suggesting she might like the bank to invest the money for her. She told them her dad was a financial advisor and they backed off. If I wasn’t and she had been looking for a loan she might well have done what they suggested.

I talked with a financial advisor last week who got a call from an existing client of hers a few weeks ago to say that he was starting a new business and needed some key person cover. The financial advisor was delighted with the business inquiry as business right now, as we all know, is challenging. Two days later she received another call from their client to say how sorry they were but they were not now going ahead as the bank were suggesting/ insisting that the business be done with their preferred insurance company. How awful!

What right I ask, does that bank or any other bank have, to take the freedom of choice away from the customer and to take business away from that financial advisor and to place the business with the bank’s provider.

Our business is highly regulated and we spent a large percentage of our income on regulatory and compliance requirements making sure our company is at all times giving best advice to our customers. Advice that is in their best interests. We make sure as far as possible that every bit of advice we give is suitable to their needs and that it is competitively priced and matches their attitude to risk.

We have spent many years trying to improve the consumer’s rights in relation to eliminating life insurance Company bid/offer spreads and other exit charges. Surely it is now time for the regulators to learn from mistakes of the past and allow the consumer, not their lenders, to decide with whom they want to place their life insurance and other insurance and investment business.

Ted Dwyer Family Business

April 2015