Which? Policy Holder Event Epilogue
Last week Which? held a policy holder event in Westminster for Norwich Union and Prudential policyholders, the objective being to publicise the Which? campaign for a fair deal for with-profits policyholders.
The day started with a photo-call with "Dick Turpin", where they called on the Financial Services Authority to "stand and deliver" for policyholders.
They were then joined by John McFall MP, the Chairman of the Treasury Select Committee and Derek Wyatt MP, a supporter of the campaign.
After the photos, they went to a meeting in the House of Lords hosted by Lord Joffe, who has been campaigning on this issue since 2000. Vince Cable MP, the Liberal Democrat Shadow Chancellor, expressed support for the campaign and discussed his involvement.
This was followed by a roundtable discussion with Vince Cable MP, Derek Wyatt MP, policyholders, their constituency MPs and Which? policy expert Dominic Lindley.
Which? intend to continue the campaign.
Monday, June 30, 2008
Tuesday, June 24, 2008
Which? Policy Holder Event
Which? Policy Holder Event
Which? has confirmed that it will be holding an event for policyholders on 25th June tomorrow at Parliament. It will take place between 1-3pm.
The event will give policyholders a chance to take part in a photo opportunity, and attend a reception in Parliament with Which? and politicians involved in their campaign to secure a fair deal.
Which? has confirmed that it will be holding an event for policyholders on 25th June tomorrow at Parliament. It will take place between 1-3pm.
The event will give policyholders a chance to take part in a photo opportunity, and attend a reception in Parliament with Which? and politicians involved in their campaign to secure a fair deal.
Friday, June 20, 2008
Barmy FSA Regulation
Barmy FSA Regulation
The Treasury Select Committee has published their report based on their inquiry into inherited estates. The Committee is none too complimentary about the Financial Services Authority’s (FSA) regulation of the with-profits industry.
Quote:
"The Committee concludes that the Financial Services Authority (FSA) is not providing a robust enough framework to manage the conflicts of interest inherent in proprietary life funds."
I am hardly surprised, the FSA's "regulation" has been all but non existent.
Chairman of the Committee, the Rt Hon John McFall MP said:
"The approach taken by the FSA towards inherited estates seems a long way from the philosophy of 'principles-based regulation' to which it aspires. Policyholders need to have confidence that their interests are being protected, but the current oversight by the FSA gives no such assurance.
Policyholders deserve a regulatory framework based on a clear set of principles and unambiguous guidance on how inherited estate can be used by life firms’ management."
He refers to FSA regulation as "barmy":
"Shareholder tax is another example of the FSA's barmy regulation in this field."
He then goes on to put a well aimed boot into Prudential:
"I was astonished that the Prudential had taken £1.6 billion from their inherited estate to pay the costs of compensation arising from mis-selling."
Then Norwich Union:
"Tens of thousands of Norwich Union’s longest-standing policyholders do not stand to receive the whole value of the recently announced special distribution. The Committee was not convinced by the argument that such phasing of payments was necessary for the stability of the funds concerned.
In my view, phasing represents an unreasonable barrier for policyholders wishing to exit the fund."
The Committee calls on the FSA to take action in several areas to ensure that policyholders interests are protected, including the following:
It is clear that those with money stuck in these lousy endowment funds have been ill served by the FSA. It really is worth, in my view, considering mounting a class action against the FSA and the life assurance companies for this disgraceful situation.
The Treasury Select Committee has published their report based on their inquiry into inherited estates. The Committee is none too complimentary about the Financial Services Authority’s (FSA) regulation of the with-profits industry.
Quote:
"The Committee concludes that the Financial Services Authority (FSA) is not providing a robust enough framework to manage the conflicts of interest inherent in proprietary life funds."
I am hardly surprised, the FSA's "regulation" has been all but non existent.
Chairman of the Committee, the Rt Hon John McFall MP said:
"The approach taken by the FSA towards inherited estates seems a long way from the philosophy of 'principles-based regulation' to which it aspires. Policyholders need to have confidence that their interests are being protected, but the current oversight by the FSA gives no such assurance.
Policyholders deserve a regulatory framework based on a clear set of principles and unambiguous guidance on how inherited estate can be used by life firms’ management."
He refers to FSA regulation as "barmy":
"Shareholder tax is another example of the FSA's barmy regulation in this field."
He then goes on to put a well aimed boot into Prudential:
"I was astonished that the Prudential had taken £1.6 billion from their inherited estate to pay the costs of compensation arising from mis-selling."
Then Norwich Union:
"Tens of thousands of Norwich Union’s longest-standing policyholders do not stand to receive the whole value of the recently announced special distribution. The Committee was not convinced by the argument that such phasing of payments was necessary for the stability of the funds concerned.
In my view, phasing represents an unreasonable barrier for policyholders wishing to exit the fund."
The Committee calls on the FSA to take action in several areas to ensure that policyholders interests are protected, including the following:
- To ensure that a fair price is offered in a re attribution, not just an adequate price.
- To provide a very strong case about why the phasing of special distribution payouts should be permitted, noting that the FSA has yet to put forward an adequate case.
- To consult on a redesign of the overall regulatory system for with-profits funds during 2008. The Committee said that they are not satisfied that the FSA has done enough to provide a robust framework.
- To consult on the charging of shareholder tax to the inherited estate by the end of 2008, noting that their view is that it should not be permitted.
It is clear that those with money stuck in these lousy endowment funds have been ill served by the FSA. It really is worth, in my view, considering mounting a class action against the FSA and the life assurance companies for this disgraceful situation.
Monday, June 16, 2008
Policyholder Event
Policyholder Event
For information:
"Which? is considering staging a policyholder event in central London on 25th June, from 10am to 12pm. This is a great chance for policyholders to stand up and be counted in our campaign for a fair deal.
We are only in the planning stages at the moment, but if you'd be interesting in coming along please let us know asap. We will then keep you updated with our plans.
Best wishes,
The Which? With-Profits Team
Which?
2 Marylebone Road
London NW1 4DF
www.which.co.uk"
For information:
"Which? is considering staging a policyholder event in central London on 25th June, from 10am to 12pm. This is a great chance for policyholders to stand up and be counted in our campaign for a fair deal.
We are only in the planning stages at the moment, but if you'd be interesting in coming along please let us know asap. We will then keep you updated with our plans.
Best wishes,
The Which? With-Profits Team
Which?
2 Marylebone Road
London NW1 4DF
www.which.co.uk"
Thursday, June 05, 2008
Reattribution Change
Reattribution Change
The Financial Services Authority (FSA) has proposed that insurance companies should no longer be able to use surpluses from their with-profits funds to compensate customers who have been mis-sold endowment policies.
Many of the claims for mis-selling of endowment policies have been settled using with-profit surpluses and returns on the retained funds.
Under existing FSA regulations, compensation and other business costs can be met from orphan funds, which are eventually reattributed to policyholders and shareholders, normally at a ratio of 90-10 (policyholders to shareholders).
However, the proposals for the reattribution of Norwich Union's £2.6BN has brought down a deluge of criticism on the heads of the FSA and life assurance companies for the use of retained funds in this way.
Clare Spottiswoode, the policyholder advocate in this case, has described Aviva's (owners of Norwich) proposals and the FSA regulations as unfair to policyholders.
The proposal by the FSA may be a step in the right direction, if it is implemented.
The Financial Services Authority (FSA) has proposed that insurance companies should no longer be able to use surpluses from their with-profits funds to compensate customers who have been mis-sold endowment policies.
Many of the claims for mis-selling of endowment policies have been settled using with-profit surpluses and returns on the retained funds.
Under existing FSA regulations, compensation and other business costs can be met from orphan funds, which are eventually reattributed to policyholders and shareholders, normally at a ratio of 90-10 (policyholders to shareholders).
However, the proposals for the reattribution of Norwich Union's £2.6BN has brought down a deluge of criticism on the heads of the FSA and life assurance companies for the use of retained funds in this way.
Clare Spottiswoode, the policyholder advocate in this case, has described Aviva's (owners of Norwich) proposals and the FSA regulations as unfair to policyholders.
The proposal by the FSA may be a step in the right direction, if it is implemented.
Monday, June 02, 2008
Risky Business
Risky Business
A survey of more than 2,000 people, carried out by Engage mutual assurance, showed that 23% of people with a mortgage will only be able to pay it off if they inherit money.
That's a risky way to keep a roof over your head.
A survey of more than 2,000 people, carried out by Engage mutual assurance, showed that 23% of people with a mortgage will only be able to pay it off if they inherit money.
That's a risky way to keep a roof over your head.
Monday, May 26, 2008
Standard Life Rejects Fund Call
Standard Life Rejects Fund Call
Standard Life has rejected a call to use £100M a year from its profits to fund a programme to cover the firm's endowment policy "black hole".
The call to build up a fund to cover the shortfalls of with-profits mortgage endowments, came at the company's annual general meeting in Edinburgh last week.
Alastair McClelland, a Standard Life shareholder, used the AGM to demand that the company set aside £100m a year over ten years into the firm's "with-profits fund".
Standard Life chairman Gerry Grimstone argued that the problems with with-profits policies were a legacy of the company's mutual past.
In 2000 Standard Life promised that it would meet any shortfall policyholders faced on their endowment policies. However, when the company got into solvency problems, the promise was changed in 2004 to a guarantee of paying only a proportion of shortfalls.
Standard Life has rejected a call to use £100M a year from its profits to fund a programme to cover the firm's endowment policy "black hole".
The call to build up a fund to cover the shortfalls of with-profits mortgage endowments, came at the company's annual general meeting in Edinburgh last week.
Alastair McClelland, a Standard Life shareholder, used the AGM to demand that the company set aside £100m a year over ten years into the firm's "with-profits fund".
Standard Life chairman Gerry Grimstone argued that the problems with with-profits policies were a legacy of the company's mutual past.
In 2000 Standard Life promised that it would meet any shortfall policyholders faced on their endowment policies. However, when the company got into solvency problems, the promise was changed in 2004 to a guarantee of paying only a proportion of shortfalls.
Monday, May 19, 2008
The 9 Million Shortfall
The 9 Million Shortfall
Over 10 million endowment policies were sold to hapless mortgage applicants in the 1980's and 1990's. The policyholders were assured by the insurance companies that the endowments would pay off the mortgage (why buy it if it wasn't fit for purpose?) and that there may even be a surplus.
Unfortunately those assurances, as we are all well aware, were worthless.
Fairinvestment.co.uk have conducted research that shows that a staggering 86% of endowment policy holders (who were questioned) have been warned that their endowment policy will not be enough to pay off the mortgage.
Could the companies that sold and manage these useless products please explain to us exactly what is the purpose of these useless products, if they are not going to pay off the mortgage?
Within those who expect a shortfall, 41% are expecting a deficit of 25% and 23% are expecting ashortfall of a mind numbing 50%.
What exactly have the companies that have been "manging" these policies been doing with their policyholders' monthly contributions?
The figures confirm government findings, which in 2003 estimated that 80% of endowment policies would fail to fulfill their intended purpose.
So, once again, let me give the companies that sold and manage these useless policies the opportunity to answer this question:
Given that these products are incapable of paying off policyholders' mortgages, what exactly are they good for and why did you sell them in the first place?
Over 10 million endowment policies were sold to hapless mortgage applicants in the 1980's and 1990's. The policyholders were assured by the insurance companies that the endowments would pay off the mortgage (why buy it if it wasn't fit for purpose?) and that there may even be a surplus.
Unfortunately those assurances, as we are all well aware, were worthless.
Fairinvestment.co.uk have conducted research that shows that a staggering 86% of endowment policy holders (who were questioned) have been warned that their endowment policy will not be enough to pay off the mortgage.
Could the companies that sold and manage these useless products please explain to us exactly what is the purpose of these useless products, if they are not going to pay off the mortgage?
Within those who expect a shortfall, 41% are expecting a deficit of 25% and 23% are expecting ashortfall of a mind numbing 50%.
What exactly have the companies that have been "manging" these policies been doing with their policyholders' monthly contributions?
The figures confirm government findings, which in 2003 estimated that 80% of endowment policies would fail to fulfill their intended purpose.
So, once again, let me give the companies that sold and manage these useless policies the opportunity to answer this question:
Given that these products are incapable of paying off policyholders' mortgages, what exactly are they good for and why did you sell them in the first place?
Tuesday, May 13, 2008
The Traded Endowment Policy Market
The Traded Endowment Policy Market
The Motley Fool gives a straightforward, helpful and easy to understand explanation of the traded endowment policy market.
"A traded endowment policy (TEP) is an endowment that the original policyholder has sold on to an investor. The new investor is then entitled to all future benefits that the policy provides, as they have effectively bought it second-hand. They will also take on responsibility for paying the remaining premiums (if applicable)."
It is worth reading if you are considering selling your policy.
The Motley Fool gives a straightforward, helpful and easy to understand explanation of the traded endowment policy market.
"A traded endowment policy (TEP) is an endowment that the original policyholder has sold on to an investor. The new investor is then entitled to all future benefits that the policy provides, as they have effectively bought it second-hand. They will also take on responsibility for paying the remaining premiums (if applicable)."
It is worth reading if you are considering selling your policy.
Wednesday, May 07, 2008
Worse Than Worthless
Worse Than Worthless
According to a recent survey by Investment, Life & Pensions Moneyfacts the vast majority of 25 year with-profits endowment policies are now are producing lower returns than they did last year and the year before that.
That's not too good!
Are the people who sold us these useless products, and the people who continue to mismanage them ,receiving lower bonuses as a result of their failure?
I doubt it!
The Motley Fool has some advice about the options available to holders of these useless products.
According to a recent survey by Investment, Life & Pensions Moneyfacts the vast majority of 25 year with-profits endowment policies are now are producing lower returns than they did last year and the year before that.
That's not too good!
Are the people who sold us these useless products, and the people who continue to mismanage them ,receiving lower bonuses as a result of their failure?
I doubt it!
The Motley Fool has some advice about the options available to holders of these useless products.
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