With profits bond

>:(Wanted to cash in my Life with Profits bond, with a reputable company. On 1st March, I received a telephone valuation which I was happy with. I posted my written application which was received on the 2nd March (confirmed by the company). In due course I received my cheque which was more than £900 less than the telephone valuation! I complained, and the company apologised and stated that they had introduced a Market Value Adjustment on the 26th February. They offered £50 by way of an apology. I refused the offer and, after several more communications, they are now offering £300. I have contacted the Financial Ombudsman, but little help. Can I get ther company to pay up the full amount?

[BULLNOTBEAR]

You should have had a written confirmation of what was offered. This is usually valid for a certain amount of days.

Many thanks for the prompt response. Valid point, but as I sent the application (first class post) on the same day as the telephone valuation, I did expect the figure to be not too dissimilar to the valuation.
Are you suggesting I accept what is on offer?

[BULLNOTBEAR]

I'm not saying accept it or not but just saying if you were offered a sum this should have been provided by a written confirmation. Doesn't the provider have record of the sum offered?

Looks like they are seeing that they are on the wrong side here if they are offering £300.

Keep plugging!!

[DiggingOut]

Strange to think they brought in an MVA this year, after the way the market has improved over the last year. Surely the performance over the last year has been better. This means that you have been harmed because they allowed people to cash out without an MVA, so they are bringing in a higher one than they would have if they had properly had one last year.

I might be inclined to argue that point, but it really isn't your strongest point. Your strongest point is their telephone quote, of which they almost certainly have a record. Insist that they check the recording of the telephone conversation.

I would keep trying for the full amount. I wouldn't accept less than £600, but if they offer that, you really haven't done too poorly, probably. Good luck, and let us know how it comes out.

Advice much appreciated. I will keep plugginjg away as suggested. I will let you know how I get on.

[awkward]

??? Help please I,m confused.
I've got a Scottish Provident with profits bond, five years old worth 18k now want to sell. M.V.A is 4k is this right or am I being had?

[dunstonh]

Can you name the company. !Saying reputable doenst tell us anything and some of the old traditional big brands are no longer in a position to be called reputable. !

I have noticed that some plans have had an increase in the MVR over the last month but nothing at that point earlier in the year.

I would guess that you asked for a surrender value and you were given that without reference to a market value reduction. !Quite a few companies give you three figures. !Current, surrender and market value reduction. !

Some with profit funds are unitised and have a different style of smoothing so the value can drop. !Again knowing the company would answer that.

It does seem strange that they are offering you any money although amounts upto £300 dont necessarily mean they accept they are in the wrong but its just cheaper to get rid of you and not have the admin costs or fsa fees to pay for taking the complaint further. ! Of course, they may have listened to the tape of your phone call and the member of staff may not have given all the usual warnings about the value not being guaranteed and potentially subject to MVR. !In which case they would be eager to offer you something.

Awkward, that seems perfectly acceptable to me. ! Scot Prov arent that good for with profits and i have never recommended them for that but thats not much use to you now ;). !However, you must remember that the stockmarket has fallen by about 40% since you started your investment so an MVR of that amount seems fine. !

[awkward]

:( Thanks D D for your help with Scottish Provident. I have been advised now to take 4k loss and put money into a G.E.C Distribution Bond, how does this sound to you. Any better ideas I would appreciate.

[dunstonh]

:( Thanks D D for your help with Scottish Provident. I have been advised now to take 4k loss and put money into a G.E.C Distribution Bond, how does this sound to you. Any better ideas I would appreciate.

What was the amount of the original investment 5 years ago.

4k is 22% of the current value so the GEC distribution bond would have to make 22% just to break even.

I dont know enough about your details to give advice so consider this further research to be done ;)

I'm in IFA so should know these things.... who the heck is GEC??? !Closest i could think of was GE Life. !Im not showing any GEC or anyone beginning with G in the distribution bonds list (which is now about 2 weeks out of date).

Is there any initial allocation on this new investment to help recover some of this 22% MVR? !
Is there any MVR free period on your scot prov bond. !Some had a 10 year anniversary get out mvr free date.

It may be better to wait it out and take the benefits in 5 years time MVR free or look at alternatives which give you high initial allocation and penalty free withdrawal in 5 years time.

Skandia currently have a 120% allocation bond. !Its not suitable for everyone and has a 10 year tie in but after the 10th anniversary, you can get out penalty free. ! The product isnt great but with high MVRs it can be some people's last resort. !

I recently had someone in the same situation and decided that to refund the initial commission and go with another provider with a decent upfront allocation. !it worked out to be 108% allocation. ! We then used property, corp bond, fixed int accounts with a view to sitting the next 5 years out to then take the benefits free of any penalty and then make a clean start. !(dont get me wrong, the funds selected werent duff, they included the morley property fund for example).

Can you give some more info on this GEC thing then?

[awkward]

Hiya again DD.
this G E C is General Electric Corporation paying about 6.2% p a. my IFA say little capital risk. Original investment was 15k in 1999 but I did get a benefit from its change of Mutual status. Hope this helps!

[payless]

who the heck is GEC

Think you know this anyway

GE Life is part of US based GE Financial...........

GE Financial is a member of GE Insurance..........

GE Insurance is part of General Electric Company, a diversified services, technology and manufacturing company with operations worldwide.

---
I dont get involved in investments these days, so don't know for sure what products they currently have
( again I did not think they had a distribution fund - but could be wrong)

In past they have had !High Income Bonds, and do have a variety of funds

( for high income, you might want to read capital not always !guaranteed)

[dunstonh]

I thought it was gen elec but i have never seen the insurance side referred to as GEC before. I didnt want to jump to conclusions.

Is the rate of return gross or net? (assuming its not a life bond)

Its a judgement call. One guarantees that you will have a return for the next 5 years. Which after MVA, leaves you with 9% at the end of the term (avg 1.8%pa). The other is based on potential. It could reduce the MVA over the coming years and start paying a small bonus again but that will be dependent on future performance. Plus the parent company of Abbey may not want scot prov and do nothing with it. There are rumours going round that they dont want it.

If you dont mind a little dabble, you could look at a life bond as i mentioned and get you ifa to refund some of the initial commission and then go into low risk founds. Say he gives you 108% and it makes 5% pa (gilts, corp bonds and commerical property being lower risk areas). You could be looking 33% net of brt at the end. minus the 22% MVR from scot prov is 11%. An option like this has potential to pay more or less. If you dont mind a little risk that is. Norwich Union reckon that the property fund returns for the next couple of years arent going to be double figures for the last few years but expect around 7-8% per annum.

If you really want out and understand its going to cost you 22%, then fair enough. I'm not sure going into a fixed rate product at 6.2% is such a wise idea though. Interest rates are expected to go up again this week after all and the cycle isnt yet complete.

[lara1983]

The mva has also been worrying my parents today as they have just received their annual GA portfolio bond return. Since they've invested in 1998 with £10,000 their cash in value now is only £11,048.97. this is really worrying. Their total value is 12,352.01 and their final bonus is a big fat zero! amazingly, the number of units held has also gone down from 5707 units in 2001 to 5650 in 2004- what does tis mean?? now they're stuck. Would they be better to withdraw now and cut their losses, or hold out? All help would be GREATLY appreciated, as this is, as usual, the only place where you can get an honest answer and straight talk.
Thanks,
Lara

[paul666]

the number of units held has also gone down from 5707 units in 2001 to 5650
Sometimes, the life co takes management charges in the form of units.