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We need a transparency charter for with-profits

In the course of conducting a comprehensive review of the with-profits market, which included detailed consumer interviews, it has become clear that with-profits planholders are being let down by providers through their use of inadequate and, in some cases, misleading and obfuscating product literature.

Our investigation revealed while a small number of providers were producing good returns and high-quality product information, the majority fell far short of what could be considered acceptable across three main areas:1: Many companies operate a selection of sub-funds or different product types and they produce indicative results picking the best of their crop to illustrate their returns. This deceives the investor who may be in a different product or plan to the one illustrated, which may have significantly different (and worse) results.2: Companies are not providing planholders with information about guarantees and are in some cases, it appears, trying to “hide” the guarantees. We have also seen too many examples of providers having either told, or in some cases, written to planholders telling them they do not have a particular guarantee or feature when in fact they do.3: Many companies have staff with no workable knowledge of with-profits dealing with planholders’ detailed questions and queries. At a general level, too, many companies have very poor generic information about their with-profits plans, hiding behind their PPFMs as the policyholder’s home for finding information. Most PPFMs are alien to policyholders.

Such appalling standards of service cannot be allowed to continue. We call on the CEOs of each provider to implement three basic changes to how they present product information to raise standards in this market to a level deserving of planholders:

  • Alongside the FSA-compliant PPFMS, produce consumer-friendly versions.

  • Provide in one, easily accessible place an indication of the guarantees available to planholders and the events and times those guarantees may be applied by plan-holders, as well as clear and up-to-date information on MVRs and bonuses. Critically, information on where the assets are held should also be included.

  • Provide a dedicated with-profits helpline for investors/savers to call with properly trained and informed staff.

    This is the very least the industry owes its customers and should form the basis of a transparency charter, which it behoves each provider to sign up to.

    Matthew Morris

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