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Standard extending clawback on bonds

Standard Life is extending commission clawbacks on its investment bond range to cover partial surrenders of over 20 per cent in the first two years of the product.

The new clawback structure applies to all capital investment, distribution and with-profits bonds taken out on or after November 1.

Standard says the move is a response to a rise in early encashments and is designed to encourage advisers and investors to view the products as medium to long-term savings vehicles.

The firm will apply the clawback to all amounts over 10 per cent so if 40,000 was withdrawn from a 100,000 bond in year one, it would claw back 30 per cent of commission or 0.9 per cent of the 3 per cent paid.

Jamieson Financial Management principal Bruce Jamieson says: “You should really keep your money in these for a longer period and one has to go along with their reasons for doing this. I should think other providers will probably follow suit.”

Standard Life spokeswoman Yvonne Savage says: “We have seen evidence of an increase in partial surrenders that reduced the residual value of the products. These products are aimed at those looking for medium to long-term growth.”

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