For what it's worth

By JEFF PRESTRIDGE, MONEY EDITOR AT LARGE
Updated:

 

A LIST of top insurers whose life and pensions products comply with new consumer friendly standards will be unveiled next week as part of a campaign to improve the industry's dismal reputation. Each has been awarded a Raising Standards Quality Mark by the Pensions Protection Investments Accreditation Board (PPIAB) for stripping their sales literature of gobbledegook, scrapping misleading charges and improving customer service.

Their names are being kept under wraps until Tuesday week, and the firms themselves will not be told until the day before. But Mary Macadam is sure that one name won't appear on the roll of honour - that of the Royal National Pension Fund For Nurses.

The fund, which was started more than 100 years ago by four of the City's most famous families - the Hambros, Gibbses, Rothschilds and Morgans - sells financial products to healthcare workers and it is being taken over by Liverpool Victoria friendly society.

Mother-of-three Mary, of Padisham, Lancashire, asked for surrender values on two policies she held with the fund - and received a six-page ' explanatory' letter packed with algebra. She describes it as 'baffling and utter baloney'.

Former nurse Mary, 48, says: 'Every time I look at the reams of complicated equations in the letter, my immediate reaction is to reach for headache pills. I spent 20 years in the NHS and I managed to decipher the worst handwriting that doctors and other medical professionals could throw at me. But nothing could have prepared me for what the RNPFN sent. No wonder the life insurance industry is held in such low esteem by the public.'

The letter was sent by the fund's actuary and compliance officer after Mary queried the surrender values of two savings policies she had taken out in the early Nineties. She wanted to cash them in while reorganising her finances after selling a nursing home she owned, and was offered £3,300.

The customer services department could not explain over the phone how this amount was reached and it told Mary she would get a full explanation in writing. But the six-page letter that followed contained a mind-boggling array of algebraic formulae allegedly explaining the factors involved in calculating Mary's surrender values.

Among these were compounding interest, accumulated values, mortality tables and something called endowment assurance functions. Mary thought it was a joke, but daughter Louise, 23, who trained as an accountant, confirmed it was for real. 'Even she was scratching her head after she had read it,' says Mary.

The RNPFN's chief executive, David Davies, apologised for the letter and ruefully told Financial Mail: 'This is what happens when you put an actuary inside a compliance department. The letter was over the top, too cautious and covered all angles to the nth degree. It should never have been sent. It was meant to be helpful, but in trying to achieve this all we have done is bamboozle Mrs Macadam.'

The PPIAB's boss, John Cox, says Mary's experience highlights the need for the Raising Standards Quality Mark his board is introducing. 'We hope our campaign will represent a turning point for the life insurance industry, an end to jargon and gobbledegook and a new source of confidence for customers,' he says. He hopes that by next February, 40% of the life insurance industry will have gained his organisation's Quality Mark.

• Details of the aims of the PPIAB may be viewed at www.ppiab.com

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