Capital used as no interest is this legal?

cmac

Hi
My poor Mum has just discovered that 60k shes put in a Pearl insurance policy (capital protected) that was paying her the interest has been taking the £3000 paid to herself from the capital as there was no interest made to be paid out.

My question is - is this legal - can they do that and not tell her?
Shes not happy but thinks theres nothing she can do. I want to help even if its writing a few letters to ask the right questions

Can anyone help please?

RayWolfe

cmac wrote: »

Hi
My poor Mum has just discovered that 60k shes put in a Pearl insurance policy (capital protected) that was paying her the interest has been taking the £3000 paid to herself from the capital as there was no interest made to be paid out.

Sorry, cannot help. Do not understand this statement. Could you put it a different way? Sometimes charges will be made from the capital and if there is not enough growth from the investment it will reduce the capital. Is that what you mean?

dunstonh

My question is - is this legal

absolutely. Indeed, for many people it is very tax efficient and the best way to do it.

can they do that and not tell her?

They have told her. It would be in the key features illustration, policy booklet and reasons why letter that was issued at the time (I've seen Pearl ones and they have had it in there).

The problem appears to be a misunderstanding by you or your mum. The Pearl product doesnt pay interest. Never has, never will. It invested in a with profits fund which cannot go down by less than you pay in minus what you take out. All withdrawals made are against the capital value. There are two types of returns. Annual bonus and final bonus (pearl call them daily and additional bonus). The annual bonus when added cannot be taken away. The additional bonus can fluctuate with investment returns and Pearl would have wiped most of these out over the last year due to market conditions.

Your mum had an upto 5% p.a. withdrawal and that continues to be paid until she says different. The investment returns will fluctuate and sometimes they hit 5% and sometimes they dont. Pearl closed down over 6 years ago now and she must have seen periods when it didnt make the 5% before as well as some when it did.

As far as the product goes, it has done exactly what it should have done with regards to withdrawals. It may not be a very good product. Its osbolete and comes from a long closed insurer who is never likely to pay good returns again. However, they are not grounds for complaint. The only possible thing where there would be mis-sale was if she was told the capital was protected after the 5% was paid. However, the paperwork wont say that so unless she has any evidence to back that up, its likely a complaint would be rejected.

cmac

Thank you both.
I think Dunstonh has hit the nail on the head. I didnt really understand either my Mum only said her capital was protected but now finds out the money has came out of it.
What you have said Dunstonh makes perfect sense.
I will try to find the paper work for it and have a read but I think theres nothing I can do.
Thank you for your help
cmac

cmac

PS I live in England and my Mum in N Ireland hense why I dont know more.

laney365

Our Mum seems to be in a similar position but what is the best alternative for an 87 year old? Any ideas please?