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.
In a note sent to advisers last week, seen by Money Marketing, L&G says: “We made the decision not to offer ongoing adviser charging when initial adviser charging was made available in April, as we believed ongoing adviser charging may not have been in the customer’s best interest. This is because it could prompt a market value reduction; more units would need to be sold to pay for the adviser charging, which would have a negative effect on the value of the bond.
“The market for with-profits bonds without ongoing adviser charging is low, therefore the decision has been made to temporarily suspend new business investments to with profits bonds.”
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.
Investments and switches, where these are allowed, into existing pension plans, including new members to existing group personal pensions and existing regular premium savings plans, will also continue to be accepted.
Worldwide Financial Planning IFA Nick McBreen says: “This is 10 years too late. With-profits are opaque, expensive, one-sided and completely inappropriate for most people. It is interesting L&G is saying sales have dipped post-RDR.”