Claim-chaser Brunel Franklin says the Pearl Group should scrap its Pearl Promise to endowment policyholders as it says it is “not worth the paper it’s printed on”.
Pearl introduced the guarantee in April 2001, pledging to pay the mortgage in full if the endowment policy grows an average of 6 per cent a year from that time to maturity.
The company also says it will reduce a shortfall by a given amount if the policy grows at 4 per cent per year.
But Brunel Franklin claims director Ian Allison says the promise is meaningless as he claims that Pearl policies have never grown by 6 per cent a year in any of the last 10 years.
But Pearl has responded by saying that performance over the last 10 years is irrelevant. It admits it failed to meet the 6 per cent threshold in 2003 and 2004 but says the with-profits fund made 11.32 per cent in 2005 and 7.75 per cent in 2004 before taxation and expenses.
Allison also claims that Pearl is “railroading” customers into dropping the Pearl Promise or surrendering the policy if they accept compensation.
He says: “The Pearl Promise is a complete waste of time and is not worth the paper it is printed on.”
A Pearl spokesman says: “This is the most generous offer on the market. If people get compensation and also get this guarantee, then they get compensated twice, which is unfair to other policyholders.”