Prudential's Little Ray of Sunshine
Those of your with underperforming and useless endowment polices, will no doubt be dreading this year's round of letters from your life assurance companies; as they tell you, yet again, that they are cutting their bonuses on their pitifully pathetic products.
However, there is one small piece of good news for those of you with a Prudential with profits policy.
It is reported that bonuses paid to with-profits policy-holders will be the same or bigger than last year's.
Around 5.5M people hold a Prudential with-profits fund. Prudential said the fund had seen an "exceptionally strong" return of 13.4% gross over the past year, compared with the FTSE 100 index's total return of 11.25%. Over the past five years, the fund has seen a pre-tax return of 20.7%, while the FTSE 100 has seen a negative total return of 19.5%.
Prudential said that buoyant performance meant it would add £2.2bn to the value of its policies.
This means that Prudential will at least maintain the same level of bonus it paid last year across all with-profits policies. Additionally, its with-profits annuities total bonus was to be increased to 7.12% this year, up from 6.35% last year.
David Belsham, actuarial director at Prudential Assurance, said that the fund's good performance was down to "long-term prudence" quote:
"We are now seeing the benefit of long-term prudence. We took early action to protect policyholders' funds by switching out of equities ahead of the prolonged bear market and policyholders are now benefiting from the strong returns earned on Prudential's with-profits fund...This year's bonus declaration shows that with-profits continues to be an attractive investment for policyholders when provided by a financially strong and well managed fund, such as Prudential."
I have but two simple questions:
1 If the Pru can do this, why can't the other life assurance companies?
2 The implication of the Pru's prudence (forgive the pun), is that other life assurance companies have not been prudent. This surely means that they (the other life assurance companies that have cut bonuses) can be sued for mismanagement, doesn't it?
Wednesday, February 23, 2005
Tuesday, February 22, 2005
The Lottery of Claiming Compensation
The Lottery of Claiming Compensation
This is Money has an interesting article about the mixed fortunes of two people with identical endowment mortgages, taken out with Canada Life.
It seems that despite the similarity of their policies, when they tried to claim compensation for an expected shortfall, they were treated differently and offered different amounts of compensation.
As I have long suspected, since I began this site over two and a half years ago, the treatment that you get from the life assurance companies and their acolytes is a lottery.
Some win, the majority lose.
This is Money has an interesting article about the mixed fortunes of two people with identical endowment mortgages, taken out with Canada Life.
It seems that despite the similarity of their policies, when they tried to claim compensation for an expected shortfall, they were treated differently and offered different amounts of compensation.
As I have long suspected, since I began this site over two and a half years ago, the treatment that you get from the life assurance companies and their acolytes is a lottery.
Some win, the majority lose.
Monday, February 21, 2005
Slightly Off Topic
Slightly Off Topic
Here is a useful site, that I found today, for checking house prices.
UK House Prices - 3 million UK property records searched here
Here is a useful site, that I found today, for checking house prices.
UK House Prices - 3 million UK property records searched here
Sunday, February 13, 2005
The Long March
The Long March
Those of you with long memories, who have been following my attempts to try to secure redress for the mis-selling of my two underperforming useless endowment policies, may recall that I lodged a claim via professional complaint handlers way back on January 21 2004.
This claim was in respect of the endowment policy that was sold to me in 1987.
Well, over one year on, the claim handlers have written to me enclosing a "mortgage history/authority request".
Apparently my life assurance company requires that I sign this, before they gather information relevant to my case.
I think I will ask one very obvious question here, why the hell has it taken over a year just to get to this stage of the investigation?
This either means that the professional claims firm a re incompetent, or the life assurance company is being deliberately obstructive.
Those of you with long memories, who have been following my attempts to try to secure redress for the mis-selling of my two underperforming useless endowment policies, may recall that I lodged a claim via professional complaint handlers way back on January 21 2004.
This claim was in respect of the endowment policy that was sold to me in 1987.
Well, over one year on, the claim handlers have written to me enclosing a "mortgage history/authority request".
Apparently my life assurance company requires that I sign this, before they gather information relevant to my case.
I think I will ask one very obvious question here, why the hell has it taken over a year just to get to this stage of the investigation?
This either means that the professional claims firm a re incompetent, or the life assurance company is being deliberately obstructive.
Wednesday, February 09, 2005
Terminal Decline
Terminal Decline
The Scotsman writes that endowment policies are in "terminal decline". They cite the recent cuts in bonuses, announced by the larger life assurance companies; quote:
"..Standard Life and Clerical Medical were this week the latest in a string of assurors to serve up unpalatable news to policyholders: the former slashed bonuses almost across the board, despite a 10.4 per cent pre-tax return on its with-profits fund, while the latter's investors fared little better, although its fund was up 9.9 per cent.
That followed grim tidings from Scottish Widows, a subsidiary of Lloyds TSB, and Aviva - owned Norwich Union. Like Standard Life, Widows cut final payouts for the sixth time in three years, following a 10.5 per cent lift in its fund.
Earlier, Norwich Union, the UK's largest insurer, became the first this year to deliver a stinging blow, slashing payouts by up to 11.5 per cent when its four funds overall enjoyed the same rise.
Prudential's bonus declaration is over a fortnight away, while Abbey National is not due to make its announcement until March. The Pru has claimed it will increase or maintain total bonus rates on all unitised with-profits and offer good year-on-year increases in value..".
The bottom line to this is that we, the holders of these lousy underperforming polices, are screwed.
The Scotsman writes that endowment policies are in "terminal decline". They cite the recent cuts in bonuses, announced by the larger life assurance companies; quote:
"..Standard Life and Clerical Medical were this week the latest in a string of assurors to serve up unpalatable news to policyholders: the former slashed bonuses almost across the board, despite a 10.4 per cent pre-tax return on its with-profits fund, while the latter's investors fared little better, although its fund was up 9.9 per cent.
That followed grim tidings from Scottish Widows, a subsidiary of Lloyds TSB, and Aviva - owned Norwich Union. Like Standard Life, Widows cut final payouts for the sixth time in three years, following a 10.5 per cent lift in its fund.
Earlier, Norwich Union, the UK's largest insurer, became the first this year to deliver a stinging blow, slashing payouts by up to 11.5 per cent when its four funds overall enjoyed the same rise.
Prudential's bonus declaration is over a fortnight away, while Abbey National is not due to make its announcement until March. The Pru has claimed it will increase or maintain total bonus rates on all unitised with-profits and offer good year-on-year increases in value..".
The bottom line to this is that we, the holders of these lousy underperforming polices, are screwed.
Monday, February 07, 2005
The Ombudsman
The Ombudsman
The Financial Ombudsman Service (FOS) wrote to me today, about my request for their assistance in extracting details from my life assurance provider of commission payments made on my two endowment policies.
The FOS say that they cannot help as my life assurance company, under the terms of the commission disclosure rules, is not obliged to provide me with that information.
This is very odd; it is my policy and my money, yet I am not allowed to know what they do with it!
Given the response of the FOS, I am more than a little surprised that they made me fill in a form with precisely the same details as those contained in my original request to them; when they could have told me that they couldn't help me at the outset.
The Financial Ombudsman Service (FOS) wrote to me today, about my request for their assistance in extracting details from my life assurance provider of commission payments made on my two endowment policies.
The FOS say that they cannot help as my life assurance company, under the terms of the commission disclosure rules, is not obliged to provide me with that information.
This is very odd; it is my policy and my money, yet I am not allowed to know what they do with it!
Given the response of the FOS, I am more than a little surprised that they made me fill in a form with precisely the same details as those contained in my original request to them; when they could have told me that they couldn't help me at the outset.
Thursday, February 03, 2005
Standard Life Cuts Bonus
Standard Life Cuts Bonus
In more bad news for holders of failing endowment policies, Standard Life has yet again cut bonuses; for good measure it also warned that lower payouts will continue, irrespective of the recovery in equity markets.
Standard Life has around 2.6m with profits endowment policy holders.
The cuts are the 6th in 3 years; you will recall that Standard Life "welched" on its mortgage endowment promise a few months ago, I assume its 2.6m policy holders must be feeling pretty sick by now.
The effect of this latest round of cuts can be seen in this example:
A £50 per month mortgage endowment over 25 years was worth £55K, until the latest cut; now it is worth just £49K.
I wonder of the directors of Standard Life have had their bonuses cut for good measure?
In more bad news for holders of failing endowment policies, Standard Life has yet again cut bonuses; for good measure it also warned that lower payouts will continue, irrespective of the recovery in equity markets.
Standard Life has around 2.6m with profits endowment policy holders.
The cuts are the 6th in 3 years; you will recall that Standard Life "welched" on its mortgage endowment promise a few months ago, I assume its 2.6m policy holders must be feeling pretty sick by now.
The effect of this latest round of cuts can be seen in this example:
A £50 per month mortgage endowment over 25 years was worth £55K, until the latest cut; now it is worth just £49K.
I wonder of the directors of Standard Life have had their bonuses cut for good measure?
Sunday, January 30, 2005
New Rules
New Rules
The Financial Services Authority (FSA), has issued final rules and guidance to help ensure that with profits policyholders are treated fairly.
The rules are intended to increase the transparency, and accountability, of the life assurance industry. The rules cover ao:
Mick McAteer, principal policy advisor at Which?, believes that these rules represent a retrograde step; he argues that they put even more power, and discretion, into the hands of directors.
He goes on to point out that directors will be able to carry on protecting shareholder interests, by using with profits funds as a slush fund to pay compensation costs.
Quote:
"With profits policies which are still one of the riskiest products people can invest in. The FSA has done nothing meaningful to ensure that firms spell this out. Neither have they provided the necessary checks and balances to ensure that directing minds in the sector put consumers' interests on the same level as shareholders..".
The Financial Services Authority (FSA), has issued final rules and guidance to help ensure that with profits policyholders are treated fairly.
The rules are intended to increase the transparency, and accountability, of the life assurance industry. The rules cover ao:
- The costs charged to a with profits fund, by the firm managing the fund
- Penalties levied on policyholders, who surrender their policies early
- The need for funds to be managed, to ensure maturity payouts fall within a target range set for the fund
- The requirement that information be presented to policyholders, or potential policyholders, in a format they can more readily understand
- Firms must provide information to with profits policyholders within 28 working days of a decision to close a fund to new business
- A policyholder advocate will be appointed to protect the interests of policyholders
Mick McAteer, principal policy advisor at Which?, believes that these rules represent a retrograde step; he argues that they put even more power, and discretion, into the hands of directors.
He goes on to point out that directors will be able to carry on protecting shareholder interests, by using with profits funds as a slush fund to pay compensation costs.
Quote:
"With profits policies which are still one of the riskiest products people can invest in. The FSA has done nothing meaningful to ensure that firms spell this out. Neither have they provided the necessary checks and balances to ensure that directing minds in the sector put consumers' interests on the same level as shareholders..".
Friday, January 28, 2005
Form Filling
Form Filling
I finally got "off my backside", and filled the form that I received from the Financial Ombudsman Service the other day.
This form relates to my complaint against my life assurance company, for not providing me with details of commission payments made on my two endowment policies as requested back in November.
The wheels of justice turn slowly!
I finally got "off my backside", and filled the form that I received from the Financial Ombudsman Service the other day.
This form relates to my complaint against my life assurance company, for not providing me with details of commission payments made on my two endowment policies as requested back in November.
The wheels of justice turn slowly!
Thursday, January 27, 2005
Fallout
Fallout
The Financial Services Authority (FSA) is reported to be conducting an internal review of its investigations and enforcement operations, after the financial services and markets tribunal overturned its £1.1M fine on Legal & General (L&G) for endowment mis-selling.
The FSA is expected to appoint one of its top officials to lead the review.
The Financial Services Authority (FSA) is reported to be conducting an internal review of its investigations and enforcement operations, after the financial services and markets tribunal overturned its £1.1M fine on Legal & General (L&G) for endowment mis-selling.
The FSA is expected to appoint one of its top officials to lead the review.
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