Unfair exit penalty on investment?

wavey-davey_2

Hi,
About 14 years ago I started paying into a 25 year investment plan. I have since stopped the payments and the investment is growing, currently valued at about £39,000. However I need to use this money now and enquired about withdrawing the funds.
The bank stated I can access to funds but it will cost me £8000 in early exit penalties. This seems a bit steep to me, does anyone know if I can challenge this in a similar way to the other bank charge claims?

thanks,
Dave

dunstonh

You cannot challenge it because it is a known contract event on the contract that was in place before you signed the contract.


Penalties like that were common place on old fashioned plans.

wavey-davey_2

Thanks for the reply - not what I wanted to hear though!
Is there nothing that can be used to reduce the charge - i.e. by questioning if it really is proportional? I was thinking the bank charges were stipulated in agreements but have been challenged successfully.

... or am I on a hiding to nothing here?

EdInvestor

Tell us more about the plan.

Is it an endowment?

Were you told about the possibility of the exit penalty when you were sold the plan?

Who sold you the plan?


Which company is the provider?

wavey-davey_2

The plan is not an enowment, it's an 'international investment plan' with J.Rothschilds (now St James' Place).
I took it out when I was young after a mate had taken out a 10 year plan. To be honest I thought I was taking a 10 year plan out too but when I quizzed the rep he pointed out all the paperwork said 25 years, and he was right!

Yes, I know I didn't read it properly! :embarasse

Thanks for your help!

Dave

wavey-davey_2

OK.. on another tack - is it worth speaking to someone abot this, and if so who? Can a normal financial advisor deal with these things?

thanks

dunstonh

If it is an offshore plan (as the name suggests), then these are mostly not regulated by the FSA. So consumer protection is virtually zero.

Can a normal financial advisor deal with these things?

An IFA can analyse, report and make recommendation on any provider's products. A tied agent or multi-tied adviser cannot.

jamesd

Check to see how the penalty changes over time - it might drop significantly after 15 years.

It's also worth considering a loan instead if it's for only a couple of years, perhaps secured on the investment.