View more on these topics

Zurich is accused of ‘implied advice’

An adviser has slammed Zurich after claiming the group offered implied advice to his clients.

Capital Asset Management managing director Alan Smith says the firm has crossed the product provider line and strayed into giving implied advice.

In a letter dated April 2009, Zurich said it was withdrawing the New Star higher-income, high-yield bond, managed distribution and sterling bond funds to new investors after a period of underperformance.

The funds are now closed to new investors in its Sterling bond and Zurich pension propositions as well as the Sterling Isa/Sterling investment account.

Zurich says in the letter it “strongly suggests” existing investors should discuss remaining invested or switching options with their adviser or call Sterling directly.

Smith says: “The responsibility of the investment should rest with the adviser. I understand the need to offer more information in these times but if the recommendation was taken up it would effectively have crystallised losses made by the funds. What the group has done is overstep their role and undermined mine.”

He admits that it is sensible to keep a watchful eye on the New Star sterling bond fund, but points out that it has seen an 11 per cent rise in the past month, which clients leaving the fund could have missed.

A spokeswoman for Zurich confirms letters were sent to IFAs and their customers invested in the New Star Sterling bond fund.

She says: “In the letter to IFAs, we stated we were closing the fund to new investors and listed their specific customers that this closure affected. We also publish all details of any fund closures on our intermediary website.

“Under the terms and conditions of their plans, and as part of treating customers fairly, we are obliged to tell customers the actions that are being taken on the fund they are invested in and always strongly suggest they speak to their adviser.”

Recommended

FSA’s time is up

In the late 1980s, I was part of the consultative group approached by Francis Maude to supposedly ascertain views of senior members of the financial services industry.

Time to take up Options

Following a recent meeting between leading retirement advisers, the ABI, Origo and provider representatives, we are writing to record our continuing support and growing enthusiasm for the Options’ initiative. The performance delivered by Options’ participants demonstrates a real achievement, which has started to directly benefit customers using the Omo.

Guarantees in the retirement income market

Lorna Blyth, Royal London  Do guarantees benefit customers and, if so, when? To answer this conundrum we commissioned Millimans, a global actuarial consulting firm, to conduct an independent review of the UK retirement income market and whether guarantees really do offer customers better value for money. The brief The study was one of the most comprehensive undertaken […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment