L&G has been forced to hike redemption charges on its Portfolio Bond after an IFA exploited a loophole allowing him to invest and then immediately withdraw £7m at a huge profit.
The adviser plundered more than £200,000 of L&G funds by arbitraging a gap between low withdrawal charges on the bond and the levels of commission and extra allocation available in a special offer through Cofunds – essentially receiving free money. The life company has ceased to conduct business with the adviser (thought to belong to one of the biggest firms in the country) following the incident. It can take no further steps as the actions were not illegal. The case is an embarrassing one for L&G, a major shareholder in Cofunds, because it highlights flaws in the design of one of ...
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