Morris says the firm recently conducted a review of the with-profits market and found that planholders are being let down by providers’ “inadequate, misleading and obfuscating” product literature.
The main concerns involve providers picking their best- performing funds or product types to illustrate returns, which Morris says deceives investors who are likely to have a different product with significantly worse results.
Companies were also found to be providing inaccurate information about guarantees, often telling policyholders that they are not entitled to a guarantee when they are.
The firm is calling for providers to produce consumer- friendly versions of the FSA-compliant literature currently used, provide details of the guarantees available and the occasions they may be applied as well as up-to-date information on MVRs, bonuses and where with-profits assets are held.
Morris says: “Such appalling standards of service cannot be allowed to continue. This is the very least that the industry owes its customers.”
Association of British Insurers director of consumer strategy Maggie Craig says: “The industry agrees it must improve the way it communicates on with-profits but it does not help consumers to paint a partial picture that could cause unnecessary concern.
“The ABI is working with members and the FSA on customer information on with-profits and will publish new guidance later this year.”