A Gloucester IFA is taking Eagle Star to task over failing to let IFAs or clients know it had begun applying market value reductions to regular withdrawals on with-profit policies.
Marshallsay Mumford principal Julian Mumford says that, under with-profit plans, regular withdrawals can be set at up to 5 per cent with no tax implications for up to 20 years. He says that this is a route that many clients have been keen to take, especially when bonus rates were higher than the amount being withdrawn, although there are still people who are keen to withdraw at a higher level.
Mumford says Eagle Star has been applying MVRs on regular withdrawals without writing to clients or IFAs to let them know it was being done or making it clear in client statements. In one situation, a client has been charged £1,000 over the last three to four years.
Eagle Star spokeswoman Erica Harper says: “We are unable to comment specifically on Mr Mumford's complaint as it is going through an internal investigation and we expect to resolve this shortly. Eagle Star's with-profits bond's terms and conditions do outline the fact that a regular withdrawal MVR may be levied and this is to ensure that all customers receive a fair share of the fund. ” Mumford says: “Eagle Star have been one of the bastions of the insurance world for many years and clients have trusted them and their investment performance. For them to be treated in such a shabby way is very disappointing.”