View more on these topics

Why ScotEq with-profits bond failed to shine

Before IFAs are seduced by Scottish Equitable&#39s £500,000 ad campaign

“to give IFAs the best support in the country” (Money Marketing, May 24),

they should learn from our bitter experience.

In January 1999, we promoted their marketing literature which proudly

proclaimed: “With-profits performance bond – a shining example.”

The words ring hollow now when the product enhancements, to obtain and

retain volume business, are conveniently removed by actuarial dexterity in

an amazing exercise of smoke and mirrors that would get star billing with

the Magic Circle.

On noting that the clients&#39 terminal bonus had reduced (yes, we know it is

not guaranteed but we do not expect it to fall by 64 per cent over two

weeks), we requested a surrender quotation.

Not only had the client lost the advertised top-up bonus, provided after

one year, and the terminal bonus but a staggering 7 per cent MVR had been

applied (is this to deter withdrawal to safeguard the reputation of the

fund manager who may not have delivered the performance required?)

When we asked for an explanation, we were informed that, although the bid

price had increased by 13.3 per cent over the 28-month period of

investment, the underlying assets had not achieved this level of return.

The policy condition that allowed this discretionary power was

unintelligible other than to an actuary.

When requested, they would not provide actual figures to support the 7 per

cent MVR as with-profits is a pooled investment and individual assets are

not attributed to each investor.

The FSA is to review with-profits business to consider discretion in fund

management, the quality of information given to policy-holders and the

transparency of published information about with-profits funds.

All IFAs whose clients have been similarly affected should present their

evidence. This may ensure that any insurance provider cannot abrogate

responsibility to the IFA for yet another “misselling scandal” as we

believe they were able to do for policies sold by IFAs during the period of

the pension review.

Until there is more clarity with the operation of with-profits policies, a

worthwhile product will be seen to be tarnished and lose public credibility

by the actions of a few, which would then be to the detriment of the many.

Susan King

King Associates,




Stakeholder hits pension managers&#39 pay

Pension sales managers are the lowest-paid intermediary sales managers,earning £12,000 a year less than their investment counterparts thanksto stakeholder pensions. Recruitment specialist Paul Harper Search & Select findings interviewed136 intermediary salespeople in 22 companies for its Senior & SpecialistIntermediary Salary Survey May 2001. It showed stakeholder has eroded margins on pension products and cut thenumber […]

UCB aids advisers with free guide to buy to let

Nationwide specialist lending arm UCB Home Loans is offering a free guideto buy-to-let borrowing. The guide has been designed to help intermediaries explain to clients thebenefits and pitfalls of becoming a landlord and covers issues includingtax, tenancy agreements and financing. UCB is offering the guide after independent research by the University ofYork showed private landlords […]

Pacific quartet appeal to Baillie Gifford

Baillie Gifford is branching out in the Pacific with the introduction of the developed Asia Pacific fund.The fund is an open-ended investment company and is aimed at institutional investors such as pension fund trustees as well as private investors who are looking to add a medium risk investment to an existing portfolio.The fund will invest […]

Portman revamps loan range as rate rises are forecast

Portman Building Society is raising the rates on its range of fixedmortgages as it believes interest rates will rise over the coming months. Its fixed-rate loans start with a product fixed at 3.99 per cent untilAugust 2003, up from 3.49 per cent, with a facility to repay up to 5 percent of the capital borrowed […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm