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L&G suspends with profits bonds following sales slump

Legal & General will not be accepting any new applications for its with profits bond from January. 

The company says this is a temporary suspension due to low levels of business since the RDR. 

The company took the decision not to allow adviser charging on the product due to concerns that it would not be in a customer’s best interests as paying an advisers this way could trigger a market value reduction and adversely affect the value of the client’s investment.

However, it says the demand for with profits bonds without adviser charging is low.

Increments for existing policies will continue to be accepted but the last day for new business applications is 31 December, with new business illustrations available up to 20 December.

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  1. Given that whether a product (provider) facilitates adviser charging is not supposed to be one of the criteria for product selection I find the downturn in business somewhat surprising – or do I?
    The FCA has already expressed concerns about contingent charging and “commission substitute” charging models – and news that advisers have simply stopped using products that don’t facilitate adviser charging should be expected to get hairs on the back of the regulatory necks standing up … please be careful!!

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