Leading networks have struck the latest GE Life high-income plan off their approved lists after the recent FSA warning questioning the suitability of some high-income products.
Misys and Tenet Group, with a combined 5,700 RIs, say they will not allow their advisers to recommend GE Life's high income & growth plan VI.
Under the product terms and conditions, if the Dow Jones Euro Stoxx 50 index more than halved by the end of the plan's three-year term, investors with the growth option would lose their entire investment.
Those with the income option would only receive the annual instalments of 10.25 per cent, meaning they would recoup just 30.75 per cent of their initial investment.
The Tenet Group says this is not outlined clearly in the literature and could leave IFAs open to complaints. Research officer Eddie Chilvers says: “The growth investor is penalised more heavily in a downslide than the income investor.”
Misys says it is concerned about the term of the product although it says it has the same concerns with a number of competing products.
GE Life managing director David Evans says: “IFAs have the key role of assessing each individual's attitude to risk and the balance of their total investment portfolio, current investment conditions and the level of the relevant index.”