Royal Skandia is to require all its intermediaries to obtain a signed statement of understanding by ...
Royal Skandia is to require all its intermediaries to obtain a signed statement of understanding by clients on the purchase of new products by early next year.
It has also reconstructed the Managed Savings Account (MSA) and the Managed Pension Account (MPA).
The signed statement by clients from intermediaries, which is already a market requirement in Hong Kong, requires an adviser's client to certify they understand the product they are buying.
Royal Skandia aims to extend this business practice to all its business. An intermediary would have to demonstrate the service they are offering to a client and a client must sign a statement showing that they understand the conditions attached to the product.
This would include demonstrating to clients on different growth rates, illustrating year on year premiums paid, and demonstrating the fund's value and the surrender value.
The move will be compulsory for intermediaries from February 2003. However, initially there will be a three-month lead in period starting in November for intermediaries. This is so intermediaries can become accustomed with getting their clients to sign a statement of understanding.
In a different area, Royal Skandia has reconstructed the MSA and the MPA. On both products, Royal Skandia will offer a free allocation that gives clients help towards achieving their investment objectives.
Clients will now be allowed to access capital in an emergency, but both products will remain designed for medium to long-term savings. There is a built-in penalty free allowance that is 1% a year.
Disciplined savers will be rewarded with a bonus at the end of their agreed term. This will be 0.2% for each year, paid out at maturity.
A multi-manager approach is also to be applied to both products. This will include its balanced portfolio, market funds, manager selection and portfolio range.
Andrea Webster, offshore marketing manager at Royal Skandia, said: 'The move away from the complicated nature of capital unit plans and towards a more transparent investment that can be recommended with assurance, is the direction we are confident that the offshore market will need to go.'
The two products were launched in 1992. They are designed for both the expatriate and the local investor internationally. The minimum premium paid is £100 or e150 per month and a monthly maintenance charge of £5.
There is also a 7% bid offer spread. If a client decides to stop paying premiums a charge will apply.
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