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Friends bonus blunder after system switch

Friends Provident says it is considering writing to 260 with-profits clients who could have lost out on retirement income after the company issued incorrect with-profits bonus schedules between 2008 and 2010.

The error relates to a policy details schedule which was issued alongside an annual bonus statement and a transfer value statement.
Friends says the schedule was an “ad hoc” document which was issued to policyholders on request.

For almost two years, the schedule information for “paid-up” policies omitted details on guaranteed bonus rates despite the firm being contacted about the problem by IFA Miles Hendy in 2008.

As a result, clients trans- ferring out of the fund did not have correct information about the guaranteed bonus rates they were giving up.
Friends apologised for the “administrative error”, which it says occurred following a change to internal systems.

A spokesman says: “The key point is that the other two pieces of documentation would have had all of that information and, taken together, would have given the complete picture.

“We are looking into our approach to this in terms of whether or not we should contact customers individ- ually. But if somebody thinks that it affects them, then if they contact us we will look at it straight away.”

Bestinvest senior investment adviser Adrian Lowcock says pension providers are notorious for their poor administration. He says: “It is already hard for an investor to make a decision on something as complicated as a with-profits bond, so they really do need all the information available to them.

“Friends Provident is doing as much as it can now to resolve the issue but it is an area we have got to do better with as an industry.”

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  1. “We are looking into our approach to this in terms of whether or not we should contact customers individ- ually. But if somebody thinks that it affects them, then if they contact us we will look at it straight away.”

    What a poor attitude! If they know it’s 260 then they should be writing to them. How does their attitude stack up with TCF?

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