Where to invest

ReportInvestor

Better advice would have been to go for a stronger fund with one of the bigger insurers e.g. Norwich Union, Legal & General, Prudential or Standard Life.

Alternatively there were some smaller mutual insurers with high free assets ratios e.g. Liverpool Victoria or Wesleyan.

You are not alone. NPI got 97% of its business through IFAs .

The Free Assets Ratios in 1998 of the funds of the various companies were as follows:

Equitable Life 8% (although this ratio was a fiction dreamt up by its management)
Friends Provident 20%
NPI 10.5%
Standard Life 26%
Scottish Widows 24%
Wesleyan 28%

So you can see what sort of company NPI was keeping :eek:

The only saving grace might be if NPI has a MVR free exit date after 5 or 10 years. I advise you check for this, but I am pretty sure the answer will be no.

In that case your IFA invested you in a fund that was either at a greater risk of a stock market fall, or alternatively would have been restricted in its investment strategy.

What sort of windfall did you get, and was that a factor mentioned by Chase de Vere? Even if this was a consideration, as you can see from the above, there were other, stronger mutuals that could have been chosen.

sabelu

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The investment of 20k was made in May 2002 it paid an income of around £80 per month. The income was then stopped by NPI as it was eating into the capital. A decision then had to be made in July to surrender the fund the capital was quoted at 18k @ that point with a surrender value of 16.1k. overall the fund has made a £909 profit over this period not a good return eh ?
We are currently pursuing a claim through CDV for mis-selling.

ReportInvestor

Was the income being paid out without the MVR being applied? If so, why was it stopped except to increase NPI & CdV's charges?

If the income wasn't eligible for MVR free withdrawal, then that's another part of your case against CdV for not doing their background homework, as there were plenty of good companies available who offered 5% withdrawals free of the MVR.

Click here for some examples of WP Bonds that allow you to cash in without MVRs on particular anniversaries

Click here for some examples of companies that allow you to make 5% annual MVR withdrawals

I notice from the second link that NPI does not .

I am pleased that you are pursuing a claim v CdV for misselling - but you need to specify the grounds. Losing money is not sufficient criteria . I hope the above comments & examples help you.

dunstonh

The article you posted is a little incorrect (or closer to misleading than incorrect) on the current FOS stance. If they are saying that providers that levy MVRs currently shouldnt be recommended then you are ruling out Pru and NU. Both of whom have very strong with profits funds and current products have MVR free withdrawal points.

A similar article appeared in money marketing which is a bit more detailed and more accurate in its reporting in that it is the documentation and awareness of the MVR that was the important thing and not chosing a company that levied an MVR on an old tranche or old product.

EdInvestor

dunstonh wrote:

The article you posted is a little incorrect (or closer to misleading than incorrect) on the current FOS stance. If they are saying that providers that levy MVRs currently shouldnt be recommended then you are ruling out Pru and NU.

I understood it to mean that where a company was imposing an MVR, the advisor needed to specifically point this out (amd explain what an MVR is ) to the client, not rely on the small print.

I didn't take it to mean that to recommend a bond from a company where an MVR was imposed would be a mis-sale.Good heavens, if that were so, all WP bond sales after about 2001 would be missold. :eek:

That's not the case. [Or not yet, anyway ]

ReportInvestor

The article is not misleading, dh. It doesn't suggest what you imply it does.

It says what you say Money Marketing says.

sabelu

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The income was being paid without the MVR being applied. As the income dried up and the capital began to be affected the decision had to be made to surrender the 10yr investment prior to the 5yr first stage, as the bond was only taken out to provide the income. This then meant the surrender value was affect by MVR.

dunstonh

I understood it to mean that where a company was imposing an MVR, the advisor needed to specifically point this out (amd explain what an MVR is ) to the client, not rely on the small print.

The potential for MVR should be pointed out whether it is being charged or not. Failing to highlight it is where the potential complaints are. Not so much for medium risk people but for those that thought it was low or no risk.