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NU withdraws Bicentenary bond amid rate row

Norwich Union is withdrawing one of its with-profits bonds due to the furore surrounding high headline rates.

It is writing to IFAs about the decision to withdraw the Bicentenary bond this Friday.

The letter says: “It is becoming increasingly obvious that with-profit investment bonds being sold on the basis of high &#39headline rates&#39 are potentially confusing and are raising false expectations for some clients.”

The letter says the bond is being withdrawn to promote greater market transparency.

The move comes after the Faculty and Institute of Actuaries issued a warning about the marketing of with-profits bonds, exclusively revealed by Money Marketing. One of its main concerns was that consumers are being misled by headline bonus rates on life office marketing literature and are ignorant of the actual rates the bonds are paying out.

Quotes for the Bicentenary bond must be completed by September 29 but NU will still take applications until the end of October. It says it will find a replacement for the bond. NU says it considers investment bonds “serve an effective and flexible investment vehicle for most clients”.

CGNU spokesman Ian Frater says: “Our new products are being unveiled this week.”

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