View more on these topics

IFAs beware the pitfalls of ScotEq bond

I write to warn fellow IFAs of the problems I have encountered with Scottish Equitable and its Security Plus bond.

My clients effected this contract in March 1998 and, in view of their need for caution, the 97.5 per cent guarantee contract was recommended. £15,000 was invested and, due to the fund&#39s non-performance, the value on switching to with-profits was £13,800. However,if you want to encash, the value would be £13,233.

This is primarily because of the 2.5 per cent loss per quarter but also because the cost of buying the option is greater than the guarantee.

My clients fully understand the risk involved in any investment. However, for the period of investment, they were never informed by the company how the fund was performing and what the current value of the policy was. If Scottish Equitable had provided this information, the fund switch would have been made long ago.

When challenged on this point, Scottish Equitable advises that it is not a PIA requirement to issue statements and that the IFA is responsible for monitoring performance. This is achieved in our practice by referring to the individual valuation statements prepared by companies for clients. Apparently, I am supposed to get monthly performance statistics from the company to do this. However, on checking with the company, our reports are addressed to a partner who retired a year ago and a consultant who left three years ago.

Scottish Equitable takes no responsibility for this and wrote direct to my client in an attempt to place blame at my door. I am no longer placing business with them, something I have never done before in over 20 years in his industry.

Therefore, you or your clients may be blissfully unaware that you are also in the same position. Around £32m is still invested in this fund although it is falling and,if clients are taking an income, the situation could be far worse.

If you do find yourself in this position, I suggest you also write to Scottish Equitable&#39s customer services department.

D Kinch

Kennet Financial Services,

Devizes, Wilts

Recommended

2001 onwards – a stalejp;der odyssey

We are going to be so busy over the next six months registering stakeholder schemes, fine-tuning administration systems, briefing employers and getting ready to sign up the first customers, we will hardly have time to look further ahead.So, before we begin the final lap of preparations, perhaps it is worth lifting our eyes to the […]

Polar stations

When it comes to sales of and advice on retail investment products, the ABI believes the interests of consumers, regulators, advisers and providers are pretty close to one another. These groups would probably all agree that the following three overall aims are crucial – to ensure consumer protection through transparency and product quality; to promote […]

Flexi Catmarks too rigid for some lenders

The proposals to Catmark flexible mortgages has split the industry with some lenders claiming that defining “flexibility” is too simplistic way to solve cons- umer confusion.Lenders including Bank of Ireland and Platform Home Loans hit back at the proposals after the Council of Mortgage Lenders and the Government launched a study into the flexible mortgage […]

IFAs set to take 60% of fund market by 2004, says survey

IFAs will account for almost two-thirds of the UK retail mutual funds market by 2004, according to a new report from research agency Cerulli Associates.The 300-page report, analysing distribution in the UK market, predicts IFAs will dominate despite the proliferation of fund supermarkets.IFAs currently account for around 51 per cent of new investment into British […]

Simon Fletcher

Auto-enrolment: pay attention or pay the price

By Simon Fletcher

As a chief executive officer of a business in the financial services sector, I have been dealing with the introduction of auto-enrolment for our clients for some time, but I can also speak from an employer’s point of view, having to go through the process ourselves.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com