NPI Flexible Bond with Profit bond 11 - through Chase De Vere

sabelu

Hi,
My mum took out an investment in the above in April 2002 investing 20K. This gave her a monthly income of £83 pm. The value has just been statemented @ £19089 i.e. lost £910. She has also been advised that the £83 monthly income will no longer come from any profit but from her capital. She can of course keep the money in but obviously CDV have advised against this advising here to move, however, the surrender value as the investment is less than 5 yrs old is £16840. CDV have advised that they could negotiate on her behalf and recoup £17412 however there would be an exit penalty of £572 which they would fund as they feel some responsibility.
Any advice ?
Has anyone had this happen with this bond ?
Should we involve the FSA ?

EdInvestor

Hi Sabelu,

Did the CdV salesman who flogged your mother the product mention the exit penalty (market value adjuster?)

If not, I suggest you put in a formal misselling complaint to CdV.

If you mother has been missold she should receive her money back, pluys interest, minus any income she received.So more than 20k, compared with the 18k they are offering.

The Ombudsman (FOS, not FSA)has been ruling in favour of quite a few WP bond complaints lately.It sounds like CdV are already conceding they are at fault.

dunstonh

She has also been advised that the £83 monthly income will no longer come from any profit but from her capital.

Investment bonds always have the "income" treated as withdrawal of capital. No change there. Most likely is she has been advised that NPI, now under the ownership of a venture capital company (3rd owner in 3 years) have limited potential for growth on their with profits fund and are unlikely to grow enough to meet the withdrawals and continuing to take the money will erode her capital.

She can of course keep the money in but obviously CDV have advised against this advising here to move, however, the surrender value as the investment is less than 5 yrs old is £16840.

Sounds about right on the figures and the advice is common with what you expect. I arranged a surrender of an NPI series 2 WP bond 2 weeks ago. That is now sitting in a new bond which got 109.5% allocation to make up much of the loss.

CDV have advised that they could negotiate on her behalf and recoup £17412 however there would be an exit penalty of £572 which they would fund as they feel some responsibility.

Obviously, we do not know the details but they can do better than that. If they dont improve the terms, find an IFA that will

Has anyone had this happen with this bond ?

Loads of people. I have a lovely report on NPI which charts the downfall of NPI/Pearl and London Life. Virtually all the blame can be placed with AMP. Although the High Court can take some of the blame for allowing AMP to raid the orphan funds. Had that not happened, things would not be anywhere near as bad as they are today.

Should we involve the FSA ?

No. The FSA do not deal with complaints. They are the regulator only. The FOS is the ombudsman but they will not deal with the complaint either. If your mother feels the product was incorrect for her, she should place her complaint with CDV. Poor investment performance is not grounds for complaint.

You will not find CDV concede anything about fault. Their PI cover would allow no such thing. CDV at this stage are doing the right thing. The product is almost certainly unsuitable and they are recommending a course action to put things right.

They would not have been in a situation to know that AMP would destroy some of the biggest or most respected names in financial services in such a short time.

EdInvestor

Update on the FSA probe into WP bond misselling

Plus a useful section explaining the Ombudsman's thinking about what's misselling and what's not with this product.

HTH

dunstonh

You do have to be careful not to mix up with profits fund with no MVR chargeable and those with. Plus there are those with various exit points with no MVR chargeable.

It would not be fair to mistake the good ones with the bad ones. In this case, NPI is not a good one.

sabelu

Anymore on this one please what should we do in terms of a letter to CDV or NPI.

sabelu

My mother expected to lose a penalty if she withdrew early but she would not have withdrawn if the investment would continue to pay the £83 pm.

ReportInvestor

Chase de Vere certainly should feel some responsibility.

Try the following links to the Investors' Association.

By June 2003 NPI WP Bonds had virtually nothing in equities so could not take advantage of any share market recovery

Had they properly researched the strength of the funds properly in 2002, or were the sales driven by commission? Hargreaves Lansdowne, for instance, were being very picky about which WP funds had financial strangth by Spring 2002.

Financial Mail was forthright as usual in April 2005

"....Three funds, Britannic Assurance, NPI (owned by HHG) and Abbey National Life/Scottish Mutual, are paying their 276,000 investors no income at all. These people were hoodwinked, purely and simply. We have yet to come across a single case where the market-value reduction penalties, which are used to trap these people, were clearly explained to them....."

I think the key, as noted above, is whether it was explained that there could be a loss of capital and/or whether she was aware of the potential MVR.

In my own experience of buying a WP Bond with an financial adviser from Friends Provident, these things were never touched on. Nor did he point out that some bonds with other companies had the safety net of MVR-free exit dates.

dunstonh

Chase de Vere certainly should feel some responsibility.

How can you make that judgement? We know nothing about what was or wasnt said or what was documented.

or were the sales driven by commission?

No difference between WP bonds or unit linked bonds.

ReportInvestor

A1) Chase de Vere should have checked out the strength of the WP fund at NPI. Hadn't it demutualised for want of capital?

A2) Why did the adviser have to choose a bond? Why did the adviser choose a NPI bond?

sabelu

......on this as my mother received final information from CDV. They have offered her a surrender value of 16.8k but if she reallocates with them it will be 17.4k. Would she be better contacting NPI herself and getting a surrender value direct ?