Policyholders contacting Hill House Hammond (HHH) regarding mid-term adjustments are being advised to take out new policies with a subsidiary of Norwich Union (NU), according to sources.

Sources said that HHH's regional managers had "issued a directive" to branch managers to direct customers to NU subsidiary Haven Insurance Policies.

They said policyholders were not being properly informed of the brokers' situation and were not being given a range of options.

"Obviously that makes it easier to convert them into NU Direct customers," one source said.

The sources also claimed that HHH was still selling new business and renewing existing policies.

An NU spokesman said: "HHH continues to operate and will continue to trade, probably until the end of the year." But he said HHH was not taking on new personal lines business.

He also denied claims HHH was directing all business to Haven.

The spokesman said: "HHH is a broker and it will give advice. We're not telling people to do anything. HHH will provide a solution that best suits the customer. That may be NU Direct, it may be Haven."

He added that customers were not being disadvantaged.