The money comes from the commission rebates that policyholders receive on the products they buy through fee-charging advisers. Instead of reinvesting all the commission waived by financial advisers, the insurers levy a fee of up to 5 per cent on the amount being reinvested.
The difference can be up to £100 on a commission of £2,000, the amount normally paid when one-off investments of about £40,000 are made or where clients take out some regular premium policies over 25 years.
These tactics are infuriating advisers who deal with their clients on a fee-paying basis. They believe policy-holders are being penalised through no fault of their own.
They also come as the Inland Revenue has indicated that it plans to punish fee-paying investors by charging them tax on commissions that are rebated back to them.
The taxman's attack is a double whammy for policy-holders, who are being told that they may be taxed even if the full amount of waived commission is given back to them instead of being reinvested.
Roddy Kohn, an adviser at Kohn Cougar in Bristol, which rebates more than £50,000 in commissions each year, said: "There has always been a perception that commissions are too high.
"Yet the real problem is not the commission but the charge levied on these products, which is too high.
"In our company, we operate largely on a fee-paying basis and then rebate our commission in such a way that the client's investent is enhanced. It is unfair for them to be asked to pay extra for a commission we are not receiving anyway."
Philippa Gee, a fee-charging financial planner at R E Gee, in Shropshire, said: "Our charges reflect the actual amount of work we carry out, not the commisssion earned, as selling a product is not necessarily involved.
"We find that up to 85 per cent of our clients prefer to receive the rebated commission, so we send it to them by cheque. Our fees are separately charged.
"Because we say in writing that the cheque we send is to be used for them to reduce the fee they are being charged, it should be possible for people to escape the Revenue's new tax provisions."
Lin Ashurst is a financial planner at Norton Partners, near Bristol, and her company rebates at least £100,000 in commissions each year, most of which is used to enhance the investments of clients. She said: "It is a problem and we are very concerned. It is very difficult to ensure that we are getting full value for our clients, and we have to analyse allocation rates to their investments very vigilantly to make sure that they are getting a fair deal.
"We use the commission and set it against clients' future fees. The system works extremely well, but we may still be had by the Revenue.
"It really is crazy. If we say that there is an investment that costs £10,000 which pays a certain commission but we don't want it - it gets zapped by the Revenue or the life company takes its slice.
"If we say that a product costs £10,000 but we will discount it by the same amount, then it's not taxable." Ms Ashurst said that the Revenue might also move against clients even if cheques were supposedly only sent to them to pay fees.
James Higgins, a director at Chamberlain de Broe, a fee-charging adviser in London, said: "It is not brokers who are causing the problem. What it all boils down to is that notwithstanding the brokers' instruction to waive commission, they do levy charges related to it on the reinvestment.
"I suppose the Inland Revenue is being pragmatic. But it means that investors are losing out."
Mr Higgins said that one side-effect of such policies would be to strengthen the move by fee-based advisers to products that were cheaper for savers, because they were low or non-commission investments.
"I doubt whether the Revenue will be able to object to what will, in effect, be a reduction in the once-hidden cost of financial products," he added.
A spokesman for the Association of British Insurers, the industry's trade organisation, said: "The bottom line is that more money is being invested.
"If I were a client I would not be surprised if an insurer said that is how things are structured. The charges are on the amount invested, irrespective of where it comes from."Reuse content