This client would have been better off putting his £25 a month in a tin box and decidedly better off had he put it into a deposit account.
How can an organisation such as Prudential, which now has the Scottish Amicable funds under its wing, offer such a low return?
For the record, the policy commenced on May 9, 1996 at £25 a month which to date amounts to around £3,700 worth of premiums, with an offer of a surrender value of £3,506.18. Scottish Equitable and Scottish Amicable both marketed this style of with-profits plan. It was perfect for what I used to term the family cash fund.
The policy was issued in £1 clusters and after 10 years you could encash any number of clusters whenever you wished. It was ideal for supporting the children during the latter part of their education, 18th birthday parties and weddings. If there were any clusters left over, they could be kept normally until age 65 when the monies would then come in handy as extra funds in retirement.
Therefore, the general idea was that you set up the policy to age 65 and whatever was encashed by way of clusters before age 65 was paid pro rata down to the term that the particular cluster was in force.
As each year goes by, I am getting more and more angry and in fact very concerned as to what has been held back from the public and the IFA community, particularly with regard to the efforts that the FSA is going to in refusing to reveal the names of the life offices which are alleged to have come to some agreement with the FSA.
We have also had recent correspondence with Clerical Medical with regard to my wife Dolly’s frustration and anger with the with-profits situation and the absolutely appalling results that with-profits funds are now producing.
I have said all along that I cannot understand how the industry and the FSA have swung the whole blame for the poor performance of with- profits funds on to the shoulders of the advisers.
It was a ruling of the regulator of the day that files could be destroyed after six years and all that we were meant to retain was sufficient information to be able to be of further assistance to the client at some future date should they wish. In practically all cases, no life office retained copies of illustrations in its computers.
If you are not aware of the fact, Standard Life has actually put on its website all of its illustrations which, like every other illustration that was issued and given to clients, made it clear what the actual guarantees were within each of its policies that were issued.
The truth will have to come out eventually.
Finally, to have an industry ombudsman who is exempt from the Freedom of Information Act is the most appalling piece of legislation that was ever put in place. Is there nothing that can be done about it?
Managing director and independent financial adviser, Heather Moor & Edgecomb, Chippenham, Wiltshire