TPAS, an independent service funded by the Government, says the practice of insurers charging MVRs after the policy anniversary is particularly unjustified. Chief executive Malcolm McLean says: “Some with-profits contracts imply that if the individual holds on to the policy until the anniversary date or beyond an MVR will not apply.
“It is put, deliberately in my view, in quite a deceiving way, when, in fact, the MVR applies before and afterwards. I just do not think that is right. Surely, the intention ought to be to encourage people to stay with the investment right through to the selected anniversary date but, if it goes beyond that, I cannot see what on earth the justification is to impose these MVRs.” An Association of British Insurers’ spokesman says: “We agree that better with-profits customer communications are needed and are working with members to improve their clarity.”
Richard Jacobs Pensions & Trustee Services managing director Richard Jacobs says: “The FSA should insist that firms clearly flag up the fact that penalties can apply before and after the anniversary and we need total transparency in the MVR calculation.”