View more on these topics

Product matters

If the letter I received from Skandia giving details of its new enhanced allocation bond was dated April 1 I would have been in stitches.

The terms of its new enhanced allocation bond has everything that a compliance team fears – a “too good to be true” allocation rate of 120 per cent, followed by an early encashment charge of 25 per cent in the first year, reducing by 2.5 per cent a year over 10 years. Add in limited fund choice and high charges at 2.55 per cent a year and this is a recipe for complete disaster.

This bond is targeted to attract with-profits policyholders to offset the MVAs they would pay on encashment.

But the underlying principle is that you do not get something for nothing and those insurers who continue to take the “high allocation now, claw it back later” approach to product design, are doing the whole financial services profession a disservice.

What is even more sad is that some IFAs will actually recommend this to clients.

The product seems to ignore the fact that most people in with profits are on the lower end of the risk scale, yet five of the six fund choices available carry greater capital risk than with-profits and the other is a deposit fund -who would want to invest in a deposit fund with a 2.55 per cent charge?

The with-profits bond is probably all but dead, arguably the unit-linked bond is in its twilight years, particularly if the tax treatment changes. If this new Skandia bond is anything to go by, the quicker the better.

Danny Cox is head of individual advice at Hargreaves Lansdown


In the right spirit of things?

Some might say the Financial Services Skills Council has been in the spiritual wilderness lately, stumbling on the path to exam framework enlightenment and failing as yet to find its qualifications nirvana. However, the Diary has heard that PR Kate Saunders is taking a transcendental approach to her work. Earlier this month, she climbed the […]

No Abbey apology

I would like to highlight the wonderful service that Abbey Group is providing in helping me to advise clients. Yesterday, I received a letter from the mortgage division without date, reference or name of the sender. The letter advised me that they did not hold a copy of my MCCB certificate and requested that I […]

Bogard quits as Chase de Vere chief

Mark Bogard has resigned as managing director of Chase de Vere Financial Solutions. Bogard joined the group after its acquisition of financial website Moneyextra and oversaw the merger of IFAs MX Financial Solutions and Chase de Vere Investments in March last year. Parent company Bank of Ireland pushed through the merger in May. The shake-up […]

GMAC-RFC unveils new range for adverse credit

GMAC-RFC is offering a new range of products for non-conforming clients including bank base rate tracker discount options. The range includes a two-year no extended tie-in product at 6.15 per cent available on a full-status basis or a self-cert version at 6.35 per cent. There is also a discounted base rate tracker with six-month discounts […]


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