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IFA shuns CMI over ‘hidden’ MVA on WP bond

A London IFA says he is boycotting Clerical Medical International because it is burying vital clauses within lengthy product policy descriptions.

Opal Mortgage Life and Pensions director David Gomez claims Clerical Medical International has started to apply a “hidden” market value adjuster to regular withdrawals from its with-profits bond.

Gomez says one of his clients wants to withdraw 1,000 a month – less than 2 per cent – from a 600,000 with-pro- fits bond.

He says the product summary states that “an MVA may apply… except… where regular withdrawals of up to 10 per cent are taken” but CMI is charging an MVA of 18 per cent on the withdrawals.

CMI says because the client did not keep up regular withdrawals, he has now lost the right to take withdrawals without penalty.

However, CMI accepts that this detail is not included in the product summary section of the literature.

Gomez is furious that the product summary does not state that an MVA might apply in this situation.

He says: “The FSA tells us to ensure our literature is clear, accurate and concise, yet we are expected to go through up to 42 pages on each product. If a client will even stay interested for that long, it will be virtually impossible to do this with everyone.”

Clerical Medical Internat- ional head of PR Gordon McAra says: “No bond product should be taken out without full understanding of the terms, regardless of the length of the document.

“I would have thought that the client, and especially the broker, should have read through this and accepted the terms.”

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