Scottish strife

By JEFF PRESTRIDGE, MONEY EDITOR AT LARGE
Updated:

 

Scottish Life is under fresh attack from furious policyholders and financial experts for denying windfalls to thousands of customers.

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It told policyholders late last year that they would receive £500 each, plus additional bonuses to with-profits policyholders, after the £1.1bn takeover by Royal London. Only now has it emerged that many will miss out on the £500 pay out because their endowment policies were assigned to lenders.

The group insists that assignment automatically ends a policyholder's membership. But bizarrely, the rules do not stop the Edinburgh-based life office paying enhanced bonuses on with-profits that have been assigned. Personal pension customers are also excluded from payments.

Peter and Hazel Ladyman from Furzton, Buckinghamshire, have two joint with-profits policies that they assigned to the Woolwich in the late Eighties to support a mortgage. With Scottish Life paying £1000 - £500 per member - on qualifying joint-life policies, the Ladymans will miss out on £2000. Their policies will be boosted by windfall bonuses. But Peter, 47, is still angry. 'I'm sure that Scottish Life directors will come out of this demutualisation much richer, with generous bonuses and share options,' he says. 'But this august group of men should remember that without its loyal customers they would not have a job.'

Fellow protesters Graham Mapp and his wife Margaret are being denied £1,500 in windfalls. They have a joint-life with-profits endowment and Graham has a Scottish Life pension policy. He says: 'I thought I was a member because I had a Scottish Life personal pension - but now I'm being told otherwise. I smell a rat.'

Henri Berest, an adviser with Strategic Financial Solutions in North London, is also annoyed. He has had a business relationship with the insurer going back 30 years - only to discover that most of his clients will not receive cash payouts because their Scottish Life pensions are written under trust.

He says: 'I have had to spend a lot of time in the past few weeks telling clients why they won't receive cash windfalls, and some are not too happy. Disappointed clients are no good for business - Scottish Life has a lot of explaining to do.'

Alasdair Buchanan, spokesman for the insurer, says: 'We are aware that some policyholders are concerned that they do not qualify for compensation for loss of membership rights.

'But no two companies have identical membership rules, and many people who qualify for membership with Scottish Life would not have qualified with other companies that have also demutualised.

'Neither the board nor the management can change the membership regulations. This would require a 75% majority in a vote of our current membership. We have considered in great detail whether it would be possible to change the regulations significantly as part of the transaction. But this could be secured only at the expense of existing members, and our board took the view that they could not recommend this course of action.'

Peter Ladyman is unimpressed. 'The rules are there to be broken,' he says. 'I believe someone should fight for Scottish Life customers' rights.'

A Scottish Life action group has been set up by Terry Bignall, an adviser with Piper Taylor & Partners in Faringdon, Oxfordshire. He is determined to forcibly make the insurer's board aware of the strength of feeling against the restricted distribution of cash windfalls.

• If you want to join this action group, write to: Scottish Life Outrage, Financial Mail, Room 356, 2 Derry Street, London W8 5TS.

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