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IFAs want ABI to end endowment blackout

IFAs are calling for the revision of ABI guidelines that mean Royal & Sun Alliance can leave its endowment policyholders in the dark about shortfalls until their policies mature.

In one case, a client with IFA M2 Financial, now retired, only found out he had a shortfall when he received his maturity letter, leaving him with£10,000 debt to his mortgage company. R&SA had previously told him, as part of phase one of the endowment review in June 2000, that it was in surplus. He then heard nothing until its maturity this month.

Since its last mailing in 2000, R&SA has closed its doors to new life business and imposed swingeing cuts on bonuses.

The company has begun phase two but is refusing to disclose the percentage of endowments with a shortfall. It accepts it will be higher than the 57 per cent of amber and red letters it was willing to disclose in 2000.

M2 Financial managing director Mark Howard says: “R&SA has a moral obligation to do more than this. The guidelines should be changed and are a copout. The fact that R&SA is paying minimal bonus compounds the problem. It smacks of the arrogance of Equitable Life, punishing those who have stood by them.”

R&SA spokeswoman Janine Goodison says: “We continue to follow industry guidelines which include not mailing customers within six months of maturity.”


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