Malcolm Lindley's letter (Money Marketing, December 6) neatly demonstrates all that is bad about with-profits at the current time and why radical change is so vital if the concept is to survive.
The letter documents the process for getting an increased payout on a with-profits policy – hope for a coincidence (in this case, getting a letter at the same time from another life office using discretion to determine terminal bonuses in a different way) and then complain.
This raises a number of simple questions – how can the regulators allow the size of the payout on a with-profits policy to vary according to the level of coincidences and complaints?
Was this procedure for determining payouts docum-ented in the key features and the with-profits guide?
How many other investors are losing out to discretion and could have been paid more?
Is the money that could have been paid out used to build the orphan assets?
Using discretion in ways such as this just discredits the with-profits concept and highlights why there is so much suspicion over published past performance figures.
Let us hope that the Sandler and FSA reviews can sort out with-profits, put a stop to this nonsense and lead the way for the concept to be re-invented in a transparent way fit for the 21st Century.
Senior manager, (pensions development),