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Firms deny with-profits push

Product providers have rejected claims that a recent surge in with-profits bond sales is the result of a marketing push.

Prudential and Norwich Union reported big rises in WP bond sales in their interim results but say there has been no particular marketing drive.

However, Legal & General says a 133 per cent increase in its WP bond sales in the first half of 2008 compared with the same period last year was due partly to the launch of two products in May, the capital protection income bond and capital protection growth bond.

Hargreaves Lansdown chief executive Peter Hargreaves recently suggested that commission levels of around 7 per cent could be driving advisers to “shovel” the products.

L&G declines to reveal the commission level paid on its new products due to commercial sensitivity but says it tries to ensure it does not create commission bias between different product types.

NU head of investment marketing Richard Kelsall says: “There has been no specific sales push but we have always promoted the products as a safe place for money.”

Syndaxi Financial Planning principal Robert Reid says: “With markets difficult to call, reaching for with-profits is not necessarily sensible as there is no explicit downside guarantee and if you are doing so because of increased commission, it is unethical.”


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