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MP calls for FSA to probe zombie funds

by Nicola York

Labour MP Paul Flynn has attacked with-profits zombie funds in an early day motion which calls for an urgent investigation by the FSA.

The EDM names Resolution chairman Clive Cowdery and Pearl Group chief executive Hugh Osmond and talks of the “tens of millions of pounds” which have been “milked” from funds while savers continue to lose out.

Sixteen cross-party MPs have so far signed the motion proposed last week, including home affairs committee member and Labour MP Ann Cryer, Labour MP for Edinburgh North & Leigh Mark Lazarowicz and Conservative MP for Worthing West Peter Bottomley.

The motion suggests that the losses suffered by policyholders will be on a similar scale to those suffered in the private pension and endowment misselling scandals.

It reads: “This house is shocked by the atrociously poor returns on the £95bn invested in closed zombie funds that are impoverishing small investors of 13 million pension, small savings and endowment policies.”

Cowdery has written to Flynn and the MPs that have signed the motion to address these concerns and Resolution says it expects performance to improve over time.

Pearl has had no contact with Flynn but says it would be happy to meet him to discuss the issues.

A Pearl spokesman says: “The current owners only acquired the businesses last year and in that time have taken significant steps to improve policyholder returns across the funds.”

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