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IFAs see red at big rise in Eagle Star endowment alerts

IFAs are blaming Eagle Star&#39s use of over-optimistic investment projections for 80 per cent of its mortgage endowment policyholders failing to be on target.

Its projections for the second quarter of 2002 show 59.4 per cent of endowments are red, facing a likely shortfall, 20.3 per cent amber, facing a possible shortfall, while only 20.3 per cent are green and on target. The figures are a significant deterioration over the first quarter of 2001 which showed 48 per cent red, 10 per cent amber and 42 per cent green. The company reviews policies annually on a rolling basis.

Allied Dunbar, which is also owned by Zurich Financial Services, has 51 per cent red, 28 per cent amber and 21 per cent green for Q2 2002. director Ashley Clark says: “Eagle Star used higher projection rates on comparative tables and came out cheaper. But it will be the consumer rather than the company that will pay.”

Syndaxi principal Robert Reid says: “Eagle Star sold cheap low-cost endowments that anticipated very high levels of investment returns. This was driven by marketing concerns rather than actuarial ones.”

Zurich spokeswoman Erica Harper says: “We took our board&#39s and actuaries&#39 advice and set rates which we thought were achieveable. We have since adjusted those rates. But we do not know what is going to happen in the future -a paper loss might not translate into an actual loss.”


Specialist subject

The qualification deadline set by the Mortgage Code Compliance Board for advisers is just over four months away but over half of advisers have not yet sat the exams. The Intermediary Mortgage Lenders&#39 Association, which released this statistic, says it shows ignorance and apathy on qualifications. But the MCCB claims that around 80,000 advisers have […]

Growing concern over FS transfer advice

IFAs and pension specialists are becoming increasingly concerned about the pitfalls of advising on transfers from final-salary schemes as the number of schemes winding up increases. Advisers warn that the priority given to staff already retired at the time of a scheme&#39s wind-up means that many people approaching retirement are being left with little more […]

Pru claims IFAs will be the winners in the new marketplace

IFAs will be the winners in the market after CP121 and the Sandler review, according to Prudential. In a recent presentation to City analysts, the Pru predicted that by 2005, direct salesforces will practically vanish. It forecasts that the breakdown in distribution in 2005 will be 7 per cent direct, 1 per cent tied, 3 […]

TrustNet and Jupiter offer Sipp guide

Online fund information provider TrustNet and manager Jupiter are teaming up to launch an education guide for investors about self invested personal pensions. The two say there are anywhere up to 85,000 Sipp schemes running in the UK and a clear need to raise awareness both amongcurrent holders and eligible investors as to the scope […]


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