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Ireland WP marketing crackdown to hit SMI

Scottish Mutual International is facing a clampdown on its offshore with-profits marketing following proposals to tighten up the selling process for firms based in Ireland.

The Society of Actuaries in Ireland is understood to have written to members tell-ing them not to sign off marketing material for with-profits policies that rely on promoting headline rates.

The letter is believed to say that the practice creates unreasonable expectations in consumers and says companies must stop compounding terminal and reversionary bonuses into headline rates.

The move will mean companies face tougher rules in Ireland than in the UK and other European jurisdictions.

SMI is currently the only offshore with-profits provider operating from Dublin. Rivals based in the Isle of Man and Jersey will be able to pitch their products against SMI without the same restrictions.

Both Prudential Europe and Scottish Equitable Internat-ional have balked at the prospect of establishing with-profits products from bases in Dublin.

Francis Klonow-ski & Co principal Francis Klonowski says: “With-profits is quite difficult to market now, full stop, however you dress it up. There are brokers abroad, however, who seem happy to market these products relying on misleading headline rates.

“It is a good idea that Scottish Mutual are going to have to do this – the others have to be careful because some kind of regulations or voluntary code will stop them doing what they are doing at the moment.”

An SMI spokeswoman says: “We have seen the letter which we anticipated and support. It will take confusion out of the market but for confusion to be taken out fully, it would have to be adopted universally. If not, there will be an unequal playing field. We are seeking clarification.”

The Society of Actuaries in Ireland said it would comment later this week.

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