View more on these topics

Product go-ahead was vital for MGM Advantage

MGM Advantage chief executive Chris Evans has admitted the firm may have had to close to new business if the FSA had not given its new asset-backed annuity the green light.

The firm designed its flexible income annuity to counter the run-off of with-profits policies, which Evans says is “a big threat” to mutuals. Investors in the product are given a share in the profits of the business, becoming members. FSA concerns regarding this contributed to a delay to launch of more than six months.

Speaking in an interview with Money Marketing, Evans says: “The FSA takes the very clear view that the capital within a mutual belongs to its with-profits policyholders, so mutuals feel cornered because they need to either sell with-profits or close to new business or find another way out.

“We had a long, long debate with the FSA over whether the new product could work. They needed to be clear the interests of the current with-profits holders were being looked after and that the new policyholders were genuinely going to benefit from the profits of the society.

“It took a very long time for both parties to go through the minutiae. If the FSA did not agree, we would have had to look at other options, such as closing to new business. We work for our members so if we do not have members, we have no reason to generate value.”


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm