TL;DR - Let's take a look at the speculative work, its implications, consequences and why we find it inappropriate for our professional practice or for the benefit of any kind of Client.
Speculative work ("Spec Work") is any type of work or creative service provided and delivered (partially or completely) by designers to potential customers without taking measures to ensure both work and equitable remuneration. Under these conditions, designers will often be asked to submit papers under the appearance of a contest or admission test to actual jobs as "proof" of their ability. In addition, the designers often involuntarily lose all the rights of their creative work, because they could not be protected by means of a contract or agreement. Clients sometimes use this "free work" as they want, without fear of legal repercussions.
Clients, it is an unethical practice
Speculative work is based on a "promise" that may not be real. As a Client you are in your right to request projects samples/references that meet your requirements. The Designer or the Studio will make a compilation of those that it finds appropriate for its evaluation. Speculative work involves custom-made pieces, without remuneration. Extrapolate this concept to other professions, as an exercise: would you ask three lawyers for documentation and then choose the one that suits you? Would you go to a restaurant to taste ten dishes, paying only for those that you liked? Would you see five doctors and only pay the person who gives you the diagnose that interests you?
Designers & Studios, it is irresponsible
Everyone can do what they want with their time and professional orientation or "draw" the red lines where it is suitable, but speculative work is an objectively irresponsible practice, in two ways: towards their own professional practice, diminishing its value and also towards colleagues and our professional sector. We will be investing some time and resources in the production of parts that may not be remunerated or those that we can lose the rights (and although we win a contest or sign a project, the pieces made can not be the end, by logic). Participant of this, we will continue perpetuating these practices and we will not normalize the profession.
What about the quality of the work?
In no case the items produced from a spec work process will be able to replace the ones obtained as a result of a complete Client-Designer relationship. Analysis, research, strategy, sharing communication objectives ... all these knowledge is obtained once the project is started, by work, not in a few hours as we prepare a proposal. And if a "spec" works as a final deliverable, without the aforementioned relationship, we are not doing things right.
Politely: Thank you, next
The response to these requests must be a clear and direct refusal, both for oneself and for solidarity with other colleagues. I find it appropriate to do this in a pedagogical way, detailing the reasons of this denial and referencing documentation from Colleges or Associations, as in many cases, requests of this type are due to ignorance, beyond the ethical issue we're discussing here.