The TEP Exchange, which provides an automated system for matching up endowment policy market makers ...
The TEP Exchange, which provides an automated system for matching up endowment policy market makers and advisers is to go to IPO at the start of September on AIM.
The company has already got links with a handful of market makers, including Surrenda-Link, although it does not have the backing of the whole industry, many of whom feel that it may reduce margins on sales.
More than 5,000 IFAs have registered with the company, and in the last few weeks a client section of the site has been established. This allows a potential seller or buyer of endowment policies to get a quote online, before being directed to a list of recommended advisers to actually complete the deal.
The company provides an electronic exchange that uses internet technology to create an on-line supermarket for buying and selling endowment policies. The development and full testing of the trading platform has cost in the region of £4m and the company hopes it will transform what was a slow, manual process into a speedy electronic one.
The TEP Exchange makes it easier for sellers, buyers and advisers to obtain the best price from the system in real time. Market makers who trade in endowments have seats on the TEP Exchange and submit their buying criteria and valua- tion intelligence on to the TEP Exchange 'match engine'. Advisers whose customers want to sell their endowments have access to the exchange via the web, and can instantly obtain the best price on the exchange for their clients.
'Trading an endowment usually creates more value than simply surrendering it to the life assurance company,' according to the TEP exchange.
'Typically it is 15%, but can be as much as 40% more than the surrender value. Currently though, two out of three policyholders still lose out by surrendering rather than selling. And as over £1bn worth of endowments are involved every year, many tens of thousands of policyholders are losing serious money.'
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First mentioned in Cridland Report