Letter of Authority

One of the key elements of providing advice to our clients on their existing investments is the ability to obtain all relevant information about the product/policy in question. This is where the Letter of Authority comes into play and in this article, we explain more about why this document is so important, how it is used and some of the challenges that can be experienced.

What is a Letter of Authority and how many types are there?

A Letter of Authority (LOA) is a legal document signed by the policyholder that grants a third-party (for the purposes of this article) Crowe Financial Planning UK Limited (Crowe FPUK) permission to liaise with the relevant product provider(s) on their behalf. There are two types of LOA: 

1. Servicing Rights: This allows Crowe FPUK to take over the full servicing rights to liaise on your behalf, access necessary information online or over the phone, and correspond fully as instructed. You might have heard the phrase ‘change of agency’ and this is where Crowe FPUK is appointed as your representative firm from your previous financial adviser firm.
2. Information Only: This grants Crowe FPUK the authority to request the policy information required but is limited in its power where no changes can be facilitated or information accessed online.

What information do we require for an LOA?

An LOA must include the following information: 

• signature and date 
• our registered business name, address, FCA number, email address, and telephone number 
• policyholder’s full name, Date of Birth, National Insurance number and address 
• plan details including product provider, plan type and policy number
• permission to release information 
• as the client you would choose whether your preference is an LOA that contains ‘Servicing Rights’ or if it should be ‘Information Only’.

Why do I/we need to sign an LOA?

The LOA is critical for when financial planning advice is being delivered to clients in permitting Crowe FPUK to request the necessary information to review the suitability of your plan or to make changes to your policy as instructed.

Where ‘Servicing Rights’ has been granted this helps streamline the process, authorising Crowe FPUK to handle administration tasks such as switching investment funds, topping up accounts, or arranging withdrawals.

You can revoke this authority at any time either by instructing Crowe FPUK to remove themselves from your policy or to go directly with the product provider in question.

Who can sign the LOA and how?

The policy owner(s) must sign the LOA. This can be done via a wet signature (handwritten) or, in some cases, an electronic signature.

Unfortunately, each provider has different rules in terms of how the LOA is signed and presented to them and this can limit the efficiency of the process with some product providers where everything is done via post.

How long is it valid for?

For the vast majority of providers, where a ‘Servicing Rights’ LOA has been signed this will remain in force until either as a client you cancel this authority or in our case Crowe FPUK informs the product provider in question that our authority should be removed.

There are some exceptions where product providers require the ‘Servicing Rights’ LOA to be renewed but this is rare.

In cases where an ‘Information Only’ LOA has been signed, these are typically in force for up to 12 months but there are some product providers that insist of a new LOA being provided after six months.

I/We have signed the LOA what happens next?

• On receipt of a signed LOA, our first step is to check how this needs to be delivered to the relevant product provider to avoid any unnecessary delays. 
• The LOA is then submitted through the preferred method to the product provider for them to action and note that Crowe FPUK has authority to obtain information on the policy in question. 
• We will follow up with the product provider to confirm that they have received the LOA and to then gather the information we need regarding the policy. 
• There are a number of questions that we ask of the product provider to ensure that we have a full understanding of the policy, and this information is then passed onto our Paraplanning team to review alongside the Consultant. 
• It is from this information that the Paraplanner and Consultant will assess the details and provide a recommendation to you as to whether your policy remains suitable or if changes are required.

What are the challenges experienced?

The biggest challenge is with the product providers and the time they take to respond. Whilst some are very efficient, we do find that a number are very slow in responding and this means it can take several weeks to receive all the information we need to move a case forward.

A further challenge is that the product provider will not send through all the information that has been requested so a phone call is necessary, and our experience is that this can take a long time either placed on hold or trying to get through to them.

One area we can collectively influence the challenges we experience is to ensure that the information provided is accurate and not out of date, for example, National Insurance numbers, Dates of Birth, addresses or where there has been a change of name not updated.

It is crucial to keep your information up to date with your product provider to ensure there are no unavoidable delays in the information being provided.

Some frequently asked questions

Q1. If you are just gathering information (as opposed to servicing) will a statement suffice?

No, to thoroughly review the suitability of a product there is a lot of information needed that is not available on a standard statement. As an example, the information for pensions may include: 

• normal retirement dates 
• current and transfer values 
• transfer information 
• charges, contributions, benefit options, death benefits, beneficiaries, drawdown, and fund information.

Q2. What are the benefits of signing a Servicing Rights LOA?

Many product providers allow full access online if ‘Servicing Rights’ have been agreed. This can save a huge amount of time by avoiding the need to keep phoning up the product provider and requesting information which then may need to be posted.

As well as being able to access your information easily, ‘Servicing Rights’ provides us with the authority to make changes to your plan quickly and easily on your behalf often without having to complete application forms.

In the delivery of our ongoing service, we monitor your plans at least annually and whenever there is a change in your circumstances. With ‘Servicing Rights’ in place this is a more efficient process and, if any changes are required, we can make those changes with minimal administration and less forms for clients to complete.

At Crowe FPUK we are constantly looking at ways in which we can improve the turnaround times for processing LOA’s to enhance the service we deliver and would stress the importance of maintaining accurate information with your product(s) provider to aid a smoother and more efficient financial planning process.