I read with interest the article headlined, NU in cashback pledge for with-profits bond (Money Marketing, February 12) The article states that Norwich Union has worked closely with the FSA on the guarantee and expects 10,000 new investors to take up the offer. Surely, any guarantee taken by an investor would be to the detriment of those investors remaining in the with-profits fund?
Let us assume that the stockmarket declines over the five-year guarantee period and all 10,000 new investors decide to exercise their guarantee option. It will be those loyal investors who remain in the with-profits fund who will lose out because they will be subsidising those who leave with their guarantees intact.
Surely, the concept of with-profits is that investors receive their fair share of the fund based on the performance of the fund during the time they have been invested in it and not one where some investors can leave with guarantees and those already invested have no such luxury?
I am aware that some companies already offer guarantees that market value adjustments will not be applied at certain policy anniversaries. However, in its attempts for transparency and fairness in regard to with-profits, the FSA should not allow the offer of guarantees on with-profits products to the detriment of those investors who remain invested in the fund.
Principal, Shaun Pryor IFA,
Haywards Heath, West Sussex