Insurers have written off at least £100m in clawback commission debt due to poor adviser behaviour with another £19m outstanding.
As a result, the Financial Conduct Authority (FCA) identified concerns about certain intermediaries engaging in poor practices and often entering into a cycle of selling new policies to cover clawbacks before eventually collapsing.
Although these figures represent less than 1% of collected premiums between 2021 and 2024, the regulator added this highlighted a risk within certain parts of the distribution chain that required close monitoring in line with its handbook requirements.
The issue was raised by industry group Elixir and cited in the FCA’s pure protection market study interim report.
Elixir said its data showed approximately £100m of commission clawback debt was written off by its members between 2019 and July 2025, with a further £19m reported as outstanding, following some intermediaries’ exit from the market.
It indicated that the majority of these amounts related to distributors specialising in phone-based sales.
Explaining the negative cycle, the regulator said these sales can be poorer quality with higher lapse rates which then leads to increased clawbacks until the intermediary eventually exits the market, leaving insurers to write off outstanding commission clawback debt.
Its review of insurer submissions indicated that firms had controls in place to identify and address such practices, such as lapse rates forming a key part of DQM monitoring and onboarding checks including financial stability checks.
“We have also seen evidence of improvements to reduce exposure to commission debt and monitor specific cohorts of distributors,” the FCA said.
The regulator revealed debt and write-off figures from 2019 to mid-2025, as reported by Elixir, reflected ongoing efforts to improve debt monitoring, with some improvements despite fluctuations.
Notably, more than 95% of all debt write-offs were attributed to phone-based sales firms.
It added it thought that the additional data collection, monitoring and reporting in relation to customer switching would help to address such practices.
