Scottish Widows Cut Bonuses
Scottish Widows have cut the bonus rates on their with-profits (such an ironic name for a product that does not actually produce a profit for the hapless policy holder) policies. Scottish Widows claim that the £14BN with-profits fund fell by 17.5% in 2008.
The majority of the 775,000 policies will therefore pay out less than they did last year.
The concept of "with-profits", as told to hapless investors by the life assurance companies, was that the life assurance comapnies would smooth the bonuses during the life of the policy. The fact that companies are having to cut bonuses indicates that this smoothing clearly has not taken place, and the bonus payments in earlier years were too high.
Why would the companies pay out bonuses that were too high in earlier years?
Simple, so that they could attract more investors by showing that their policies were high profit yielding products (some cynics might argue that these policies were a scam).
Friday, February 13, 2009
Wednesday, February 04, 2009
Norwich Union Renege on Deal
Norwich Union Renege on Deal
Aviva (aka Norwich Union) has announced that it is seeking to restructure its £1BN offer to policyholders for its inherited estate, which was agreed in July 2008.
It is a fair bet that any new offer will be lower, and that Norwich Union will seek ways to delay payment to their policyholders.
In a statement the company said:
"Since we agreed an offer with the policyholder advocate in July 2008, the estate has reduced significantly as a result of substantial reductions in the value of equity and property investments.
Continuing market volatility and uncertainty means that the original reattribution offer for the inherited estate no longer meets our critical test of being fair to both policyholders and shareholders. We are working closely with the policyholder advocate to see how we can restructure our offer.
While we realise this will be disappointing for our eligible policyholders, it does reflect the nature of the current exceptional investment market conditions. We expect to be able to update policyholders in the next few months."
Approximately 700,000 people were to have been offered between £400 and £1,000, and another 220,000 would have been offered a payout of between £1,000 and £3,500 if they accepted.
Who is there left in the UK who trusts in any shape, form or the slightest way the financial services industry in this country?
Aviva (aka Norwich Union) has announced that it is seeking to restructure its £1BN offer to policyholders for its inherited estate, which was agreed in July 2008.
It is a fair bet that any new offer will be lower, and that Norwich Union will seek ways to delay payment to their policyholders.
In a statement the company said:
"Since we agreed an offer with the policyholder advocate in July 2008, the estate has reduced significantly as a result of substantial reductions in the value of equity and property investments.
Continuing market volatility and uncertainty means that the original reattribution offer for the inherited estate no longer meets our critical test of being fair to both policyholders and shareholders. We are working closely with the policyholder advocate to see how we can restructure our offer.
While we realise this will be disappointing for our eligible policyholders, it does reflect the nature of the current exceptional investment market conditions. We expect to be able to update policyholders in the next few months."
Approximately 700,000 people were to have been offered between £400 and £1,000, and another 220,000 would have been offered a payout of between £1,000 and £3,500 if they accepted.
Who is there left in the UK who trusts in any shape, form or the slightest way the financial services industry in this country?
Tuesday, January 20, 2009
L&G Replaces Freshfields
Legal & General (L&G) has completed a review of its external legal advisers, and replaced Freshfields Bruckhaus Deringer with Allen & Overy.
Freshfields advised L&G in 2005, when L&G was investigated by the Financial Services Authority for the alleged mis-selling of endowment mortgages.
Freshfields advised L&G in 2005, when L&G was investigated by the Financial Services Authority for the alleged mis-selling of endowment mortgages.
Monday, January 19, 2009
Norwich Union Cuts Bonuses
Norwich Union Cuts Bonuses
The annual bonus season is upon us again and, unsurprisingly, cuts are in the offing.
Norwich Union has announced a cut in bonus payments on its "with profits" (such an ironic name!) policies. The 2.3 million people who hold a Norwich "with profits" policy suffered a cut of up to 16%.
This means that the majority of Norwich's endowment mortgage customers are likely to face a shortfall when their policy matures.
David Barral, Norwich Union Director, is quoted in the Guardian:
"Our with-profits funds have continued to prove their worth by delivering attractive long-term returns for investors while protecting them from the ups and downs of the stockmarket."
Could someone from the financial services industry care to explain to the millions of hapless "with profits" policy holders why "with profits" smoothing, in poor years, is never applied (as evidenced by the sharp cuts in bonuses); yet in good years it is applied?
Other companies will be announcing their cuts in due course, and it is certain that they will be as bad or worse than Norwich Union.
The annual bonus season is upon us again and, unsurprisingly, cuts are in the offing.
Norwich Union has announced a cut in bonus payments on its "with profits" (such an ironic name!) policies. The 2.3 million people who hold a Norwich "with profits" policy suffered a cut of up to 16%.
This means that the majority of Norwich's endowment mortgage customers are likely to face a shortfall when their policy matures.
David Barral, Norwich Union Director, is quoted in the Guardian:
"Our with-profits funds have continued to prove their worth by delivering attractive long-term returns for investors while protecting them from the ups and downs of the stockmarket."
Could someone from the financial services industry care to explain to the millions of hapless "with profits" policy holders why "with profits" smoothing, in poor years, is never applied (as evidenced by the sharp cuts in bonuses); yet in good years it is applied?
Other companies will be announcing their cuts in due course, and it is certain that they will be as bad or worse than Norwich Union.
Wednesday, January 07, 2009
Bonus Cuts
Bonus Cuts
The Times warns that holders of with profits funds will find that their maturity values will be cut again this year, because of poor performance.
Friends Provident will announce bonuses this week, Norwich Union next week.
Standard Life will declare at the end of this month, with Prudential and Legal & General making their announcements in February.
Many "with profits" (a contradiction in terms) policy holders are of course relying on these policies to pay off their endowment mortgages. A fine example, among many (eg PPI, credit card charges, bank charges, commissions etc), of how the City has ripped off the ordinary British citizen.
The Times warns that holders of with profits funds will find that their maturity values will be cut again this year, because of poor performance.
Friends Provident will announce bonuses this week, Norwich Union next week.
Standard Life will declare at the end of this month, with Prudential and Legal & General making their announcements in February.
Many "with profits" (a contradiction in terms) policy holders are of course relying on these policies to pay off their endowment mortgages. A fine example, among many (eg PPI, credit card charges, bank charges, commissions etc), of how the City has ripped off the ordinary British citizen.
Saturday, November 29, 2008
FSA Taken To Task
FSA Taken To Task
Legal & General are taking the FSA to task over its annuity rate tables displayed on moneymadeclear.com. L&G want the FSA to display real-time annuity quotes, up-to-date rates and make a provision for postcode annuities.
However, the FSA have told the FT that the tables are up to date and are updated almost daily.
Legal & General are taking the FSA to task over its annuity rate tables displayed on moneymadeclear.com. L&G want the FSA to display real-time annuity quotes, up-to-date rates and make a provision for postcode annuities.
However, the FSA have told the FT that the tables are up to date and are updated almost daily.
Thursday, November 27, 2008
Equitable Life Sale Pulled
Equitable Life Sale Pulled
Equitable Life has pulled the sale of its £7BN with-profits fund having failed to find a buyer. The reason cited being the current market turmoil.
Equitable Life will put the fund into "run-off", ie the policies will run until they mature.
Equitable Life has pulled the sale of its £7BN with-profits fund having failed to find a buyer. The reason cited being the current market turmoil.
Equitable Life will put the fund into "run-off", ie the policies will run until they mature.
Sunday, November 16, 2008
Court Case
Court Case
Simon Shaw, the England International Rugby player, is scheduled to appear at the Royal Courts of Justice as a witness in a case between two financial advisers and Zurich.
Other rugby stars (eg Rob Henderson, Phil Greening and Damian Hopley) are also mentioned. It is alleged that some were mis-sold thousands of pounds worth of endowment policies by Zurich. The allegations are being made by the executives Zurich had hired to sell policies to the rugby stars, but who claim they uncovered massive mis-selling instead.
In 1998 Zurich became the official sponsor of the Rugby Premiership, and Allied Dunbar approached Philip Matania and his partner Terence Pullen to sell its products to the rugby community.
Under the deal, Allied Dunbar lent Matania and Pullen £429K to help them build up the business. Nine months later Matania made an appointment to see Simon Shaw.
He had already signed up to an Allied Dunbar endowment policy and its Maximum Investment Plan through Allied Dunbar salesman Mike Skeele.
According to court documents, Matania thought Shaw had been wrongly advised to take out both policies. Matania and Pullen claim that others, eg Wasps players Henderson and Greening, had also been wrongly advised.
Zurich is suing Matania and Pullen for recovery of the loans plus interest, and Matania and Pullen are counter-suing, claiming Zurich sabotaged their business in revenge for them pointing out the mis-selling.
Simon Shaw, the England International Rugby player, is scheduled to appear at the Royal Courts of Justice as a witness in a case between two financial advisers and Zurich.
Other rugby stars (eg Rob Henderson, Phil Greening and Damian Hopley) are also mentioned. It is alleged that some were mis-sold thousands of pounds worth of endowment policies by Zurich. The allegations are being made by the executives Zurich had hired to sell policies to the rugby stars, but who claim they uncovered massive mis-selling instead.
In 1998 Zurich became the official sponsor of the Rugby Premiership, and Allied Dunbar approached Philip Matania and his partner Terence Pullen to sell its products to the rugby community.
Under the deal, Allied Dunbar lent Matania and Pullen £429K to help them build up the business. Nine months later Matania made an appointment to see Simon Shaw.
He had already signed up to an Allied Dunbar endowment policy and its Maximum Investment Plan through Allied Dunbar salesman Mike Skeele.
According to court documents, Matania thought Shaw had been wrongly advised to take out both policies. Matania and Pullen claim that others, eg Wasps players Henderson and Greening, had also been wrongly advised.
Zurich is suing Matania and Pullen for recovery of the loans plus interest, and Matania and Pullen are counter-suing, claiming Zurich sabotaged their business in revenge for them pointing out the mis-selling.
Saturday, November 15, 2008
140 A Week
140 A Week
Caroline Mitchell, lead ombudsman for the Financial Ombudsman Service, told an audience at MBE London 2008 that the level of mortgage endowment complaints has fallen as a result of time barring.
However, complaints are still coming in at 140 a week.
Caroline Mitchell, lead ombudsman for the Financial Ombudsman Service, told an audience at MBE London 2008 that the level of mortgage endowment complaints has fallen as a result of time barring.
However, complaints are still coming in at 140 a week.
Tuesday, November 11, 2008
FSA Fights Lautro Ruling
FSA Fights Lautro Ruling
The Financial Services Authority (FSA) has appealed to the High Court over the Information Tribunals' decision to make them name and shame the Lautro 19.
The FSA argues that the information provided to it by the "Lautro 19" was confidential, and that it can't be disclosed.
The "Lautro 19" are endowment mortgage providers who misused Lautro projections to set unrealistically high maturity figures when selling their useless products to the unsuspecting public.
It is estimated that the number of policies affected by this number in the hundreds of thousands.
The FSA, by opposing the naming and shaming of the "Lautro 19", are failing in their duty to maintain an orderly and honest financial system; in other words the FSA is not fit for purpose.
The Financial Services Authority (FSA) has appealed to the High Court over the Information Tribunals' decision to make them name and shame the Lautro 19.
The FSA argues that the information provided to it by the "Lautro 19" was confidential, and that it can't be disclosed.
The "Lautro 19" are endowment mortgage providers who misused Lautro projections to set unrealistically high maturity figures when selling their useless products to the unsuspecting public.
It is estimated that the number of policies affected by this number in the hundreds of thousands.
The FSA, by opposing the naming and shaming of the "Lautro 19", are failing in their duty to maintain an orderly and honest financial system; in other words the FSA is not fit for purpose.
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