The lack of a rule book on letters of authority can lead to protection advisers guessing what is required, according to Sphere Assured director, Wes McCranor.

Protection specialist McCranor described LOA processing times as “kind of slap dash”, explaining that it’s “not as robust as you would think it is”.

“Some insurers will come back to you in a week, sometimes it could take three months,” he explained.

He attributed this liquidity to a lack of uniformity in LOA processing, saying: “There’s no real house view around how they should be facilitated and every insurer has a different process to apply with.

“There is no rule book on the process so we’re all guessing on the best way to do it because no insurer has a slick way to get it done.”

To address this, McCranor suggested that insurers should emphasise the LOA process more, stating: “It could be slicker and it could be given more attention.”

Value in LOAs

But McCranor emphasised he does see a lot of value in the use of LOAs despite a general reluctance.

“A lot of people in the protection space say that LOAs ‘aren’t relevant’ and I can’t help but think these people are missing a trick,” he said.

“LOAs assist the process of using protection specialists as, in the wealth market in general, when you’re dealing with IFAs, it’s not a secret that a lot of them don’t do as much protection as they probably should do because they’re focused on investments, pensions etc.

“However, It’s almost an unspoken thing that they’ve always been slightly reluctant to use a protection specialist to facilitate something for their clients when they do everything else.”

He recounted that, through a conversation with a wealth manager, this reluctance stems mainly from a worry they may “lose control”.

“If you pass a client over to a protection specialist, they suddenly have all of the servicing and remuneration rights for that client that the IFA had on their books for the last however many years,” he explained.

A lot of people in the protection space say that LOAs ‘aren’t relevant’ and I can’t help but think these people are missing a trick.

To circumvent this, McCranor said he has an agreement with several firms under the terms of which Sphere provides the protection advice for a client before signing an LOA back over to the initial company so that they can continue servicing them.

“People don’t have loyalty to their protection adviser that they have to their wealth adviser and a lot of people, if they’re none the wiser that there are some seriously good protection specialists out there, will just get anybody to sort it out for them,” he said.

McCranor therefore described the use of LOAs as an extra layer of service that he believes protection advisers need to be applying to their processes.

Find out more

The aim of our Fixing Letters of Authority campaign is to see advisers and providers refine and embed a standard data set that can be used across the industry, to speed up the LOA process and enable faster and better outcomes for the end client.

To this end, FT Adviser invites you to share your experiences, and any helpful tips you’ve learned along the way, with us at ftadviser.com.

You can email simoney.kyriakou@ft.com or write in the comments below.

Do also visit FLAG to find out more about its campaign: https://www.thepensionlab.co.uk/flag.

Together we can help fix LoAs in 2025 — an industry-led solution to an industry problem.

tom.dunstan@ft.com

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