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Don&#39t consider carpetbagging – M&E warning

M&E Network is writing to its 350 plus member firms warning against recommending mutual life offices to obtain potential windfalls.

The network states the mutual status of a company “MUST NOT” form any part of a recommendation and is threatening “remedial action” if it&#39s proved a policy has been sold on that basis.

The move comes against the backdrop of Scottish Widows paying members lucrative windfalls of up to £116,000 to push through it takeover by Lloyds TSB Group.

Despite the lure of such windfalls the network says: “When recommending a particular product the potential availability of windfalls should not be allowed to provide a bias in favour of a particular provider.”

M&E has taken the action following some members basing recommendations on the likelihood of a company demutualising.

The network believes such practices are in contravention of its own and PIA guidelines.

It says a potential windfall must not be the main reason for a recommendation. If it is included a warning should be given that it is not a certainty.

M&E Network managing director Simon Hudson says: “We fully appreciate our members desire to give their clients a full understanding of the opportunities available but in this case it is important they do not get their priorities in the wrong order.”

In a separate move Scottish Widows have confirmed with profit annuity policyholders will qualify for enhanced windfalls despite not being included within demutualisation document.


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