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Review process is a farce

I was very pleased to read Robin Hunter&#39s letter (Money Marketing, March 25). We have a number of clients in very similar situations as the example given in this letter. We also have clients who are only 50-60 per cent of the way through their 25-year policy term.

They receive a brief letter based on the principle laid down, as I understand it, by the FSA regarding three levels of assumed growth.

As Mr Hunter has highlighted, the method of conducting the review has numerous faults in it. Planholders are not being advised of the guaranteed endowment element in their low-cost endowment, they are not being advised of accrued bonuses, they are not being advised of terminal bonus payable at this point in time on similar policies maturing now and, in many cases, they are not advised of the surrender value of the policy.

Also, no one is advised as to the method in which the forecasts of potential maturity values are being calculated.

In the cases that we have been involved in, we also point out to clients why there is such a thriving secondhand endowment market for with-profits policies, as even selling their plan at an additional 15 per cent of its surrender value, the purchaser, on paying the ongoing premiums, has an expenditure which amounts to less then the guaranteed value of the policy.

Something is definitely wrong. At the moment, the whole system is flawed. I believe it is the public who should be complaining direct to the FSA at the incorrect manner in which this farce is being conducted.

In cases such as Mr Hunter&#39s client and, I am sure, many of your readers&#39 clients, they should consider encouraging their clients to write to the FSA pointing out the errors in the current review procedures.

I am seriously coming to the conclusion that most of the regulators and critics of the endowment method of mortgage repayment do not really have any idea what they are talking about.

Finally, I cannot understand how one can be made to pay compensation regarding a prediction of a shortfall in a savings plan when the contract made between the provider and the purchaser has not come to a conclusion, particularly in so many cases where there is 10-15 years or more still to run before that contract expires.

Brian Pickering

Managing director,

Heather, Moor & Edgecomb,

Chippenham, Wiltshire


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