View more on these topics

IFAs hit back at FSA endowment &#39scare&#39

IFAs are accusing the regulators of creating a huge endowment scare when evidence on the ground bears no resemblance to grim predictions of millions of shortfalls.

Advisers say they have spent the last few weeks dealing with thousands of complaints from worried policy- holders concerned that their endowments will not pay off their mortgages.

They claim the majority of cases they have dealt with so far, even those falling within the serious risk of shortfall category, are unlikely to fall short of their target.

But advisers are concerned that many policyholders may have already cashed in their plans needlessly.

Their claims have been fuelled by concerns that the projection rate used for the endowment letters is flawed.

Leading IFAs say the 6 per cent figure the FSA recommends does not reveal a “true 6 per cent”. They explain the calculations are gross returns which do not take into account any expenses such as administration charges.

They say these are gross returns which are subject to further deductions such as charges, therefore the actual return a policyholder could expect on these figures is at best 4.5 per cent a year.

O&#39Halloran partner Eleanor Downie says: “The review letters may lead to people cashing endowments in because they are worried about the end result but there is no need for 99 per cent of all people with policies to worry at all about whether their contracts are going to produce the goods at the end of the day.”

Brook Financial Advice director Martin Brook says: “The regulators want to be ultra-cautious and one understands that nobody wantspeople not to have enough to pay their mortgages off. But in my opinion the basis for implementing the 6 per cent is extremely flawed and is causing untold worry and misunderstanding.”

FSA spokeswoman Louise Buckley says: “We are in the business of informing customers and not causing unnecessary alarm. We still anticipate that overall there will be around 60 per cent of policies that fall in the red and amber categories.”


All aboard for stakeholder advice

Britannic Assurance is travelling round the country in a double-decker bus to bring the stakeholder message to employers.Its roadshows follow a survey conducted for the life office which revealed that many employers are unaware of their obligations under the stakeholder pension regime.It also found IFAs are the top choice for employers who have already sought […]

&#39Catmark&#39 could clear up flexible mortgage confusion

The Government and the CML are to discuss the creation of a Catmark-style benchmark for flexible mortgages, in response to issues raised by Sun Bank.Sun Bank wrote to the Council of Mortgage Lenders expressing its fears that many so-called flexible loans fail to live up to their claims. It has called for the CML to […]

PMI probes stakeholder at conference

The Pensions Management Institute has unveiled the programme for its autumn conference at the Royal Lancaster Hotel. The event, on October 11, will feature a presentation by Schroder and the Post Office entitled, Stakeholder: is your strategy in place? as well as a presentation addressing The annuity problem, plus updates from Opra and Eversheds.

Safe and securitised

The smaller mortgage market players are pooling their resources and gaining ground in securitisation.Securitisation is now firmly established as a mainstream funding technique in the UK mortgage market but it demands high levels of admin expertise.It is taking off in the UK as more and more lenders respond to competitive pressure from new entrants.But to […]

Get your New Year off to a flying start

Ross Jackson, Senior Marketing Manager There’s no denying that these days we expect things quickly. You might have noticed it first-hand during the flurry and rush of the Christmas period. The fact is that in a world of smartphones, social media and click and collect, most clients expect to get an instant response and a […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    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