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SLI offers investors option to quit after missing out charges on fund literature

Scottish Life International is having to write to investors in its latest structured product notifying them of the fund&#39s charges after failing to cover them in its initial marketing literature.

Following discussions with the FSA, SLI is sending a cooling-off letter explaining all aspects of the protected term deposit fund after failing to state its 10.2 per cent minimum growth was gross of charges as well as tax.

As the charges that were omitted would total around 8 per cent of the fund over its five-year life, IFAs say SLI should have ensured much earlier that investors were aware that their returns would be significantly affected by the extra costs.

But they welcome SLI&#39s move to allow investors to pull out of the fund and the letter&#39s clarification of the term deposit in the product&#39s name. The FSA feared that the use of the word would lead some investors to confuse the fund with a bank or building society deposit account.

Hargreaves Lansdown director Sean Kingston says: “SLI have launched similar kinds of products before which had charges incorporated. We thought that this was another clean product but this comes as a bit of a nasty surprise.”

SLI director of marketing development Neil Lovatt says: “The FSA has expressed some concerns and we are comfortable with clarifying the situation.”

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