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Disgusted with Tunbridge Wells

In common with many of my clients, I have had a 10-year with-profits policy with Tunbridge Wells Equitable Friendly Society that matured on October 1.

We all received a letter from Twefs on August 7, stating the maturity value due for payment on October 1. Due to the events of September 11, Twefs then decided to decrease terminal bonus amounts – including the policies maturing on October 1.

However, some of my clients had earmarked the funds for various things on the strength of their letter from Twefs in August. They did not believe terminal bonuses for maturing policies that have been in existence for the past 10 years would be reduced at such short notice.

I subsequently took the matter up with David White, chief executive at Twefs, to try to obtain the full amounts for my clients.

Mr White admitted that the letters sent should have stipulated that the final terminal bonus amounts could not be guaranteed but that he had a duty not to penalise other policyholders by paying out an unfair share of assets to maturity policyholders.

He has refused to pay out the amounts due, even though it was Twefs&#39 mistake.

Twefs has admitted it was at fault and has subsequently altered letters being sent out to policyholders but this is no help to my clients.

The maturity returns from Twefs&#39 with-profits fund have been reasonably good over the past 10 years (although returns over the last three to four years have declined at a faster pace than in previous years). It would be interesting to know what other IFAs think Twefs should do. Should they honour the maturity letters sent out in August or should they protect future payouts to policyholders?

However, regarding Mr White&#39s comments about fair value to all policyholders, I also received the maturity value for my investment in the Tunbridge Wells capital and income (exempt) fund on October 1.

My £9 per month over the last 10 years produced a total maturity value of £1,090. According to Money Management statistics, the fund has grown by 6.5 per cent over the last 10 years – so does over 6 per cent a year taken out in charges represent fair value to policyholders?

It is surprising to note that for the same £9 per month contribution over the last 10 years, the with-profits fund returned £1,453 after charges while the unit-linked return produced only £1,090 after charges. Surely the with-profits policy charges had not deducted 6 per cent before allocating bonuses?

It is scandalous that Twefs has been allowed to offer policies at these low minimum contribution levels knowing full well the amounts that were being taken in charges.

I believe that there should be a cap on charges for low-level contributions.

Paul Wearden

Fernleigh Wearden & Co, Preston


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