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IFAs slam L&G over credit scored policy loans

By Adrian Cammidge


IFAs have slammed Legal & General over its &#34bizarre&#34 decision to credit score loans made against with-profit endowment policies.


The move follows the life office&#39s transferral of the running of policy loans to its banking subsidiary.


Policy loans enable policyholders to borrow a percentage of a plan&#39s surrender value. Loans are guaranteed as they are secured against surrender values.


L&G, which has over 1m endowment customers, claims it has taken the step as part of a duty of care to customers. Spokesperson John Morgan says the move will ensure policyholders meet their commitments.


He says: &#34It&#39s in the interest of the customer that when a loan is made, its is made prudently as the alternative is pawn broking.&#34


But Dowry senior financial adviser Norman Kilby says: &#34If you get a bad credit rating you don&#39t get your loan. It&#39s ridiculous as it&#39s a no risk situation with the loan repaid on the maturity of the policy.&#34


London & Country Mortgages managing director Phillip Cartwright says: &#34I find it a little bizarre why they feel they need to do this. If a customer was in arrears on their endowment payments I could understand it but if they are up to date there should be no need for concern.&#34


L&G says it will honour loans where an agreement to loans was part of the policy.

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