Fund supermarket Selestia is launching a campaign backed by several prominent IFAs aimed at forcing product providers to be more transparent when promoting their with-profits funds.
Firms including Syndaxi Financial Planning and PI Financial are throwing their weight behind Selestia's Tell Us The Truth campaign, which wants providers to reveal how they calculate their policies' MVRs and terminal bonuses.
In particular, they want an explanation for the “bizarre situation” where some providers have raised their MVRs despite significant stockmarket rises.
The campaign is also urging providers to divulge how many policyholders get the high payouts they advertise.
Selestia director Bill Vasilieff says these high returns are usually significantly boosted by the terminal bonus, which he believes few policyholders benefit from as most transfer out of their fund before maturity.
He says: “What percentage of people get big payouts? It is potentially very misleading. Terminal bonuses allow a massive amount of discretion to providers and you never get an explanation on how MVRs are worked out. It is impossible to advise on policies when they are like this. We just want providers to tell the truth.”
Syndaxi director Robert Reid says: “There is a lack of statistics showing how many people get these stunning payouts. It is very easy to pay a big bonus if only a handful of people receive it. The FSA should force them to disclose it.”
Liverpool Victoria group actuary Ian Blanchard says: “IFAs and policyholders get their eyes fixed on individual components of policies but they should look at the net results. We are transparent but some providers are not that clear. We can easily explain what happens in our policies.”