Endowment letter from Pru refers clients to Halifax

From Dave King

A client of mine recently received an endowment warning letter from Prudential. Nothing new so far but bear with me, this one takes the biscuit.

The letter states the shortfall probability but also invites the policyholder to remortgage with Halifax to redress the shortfall, rearrange the mortgage etc. This is unacceptable, not to mention non-compliant. If as a financial adviser I recommend something (even if it’s to go and speak to a lender) I have to justify it in writing to a client. I believe it’s called a letter of recommendation (suitability or reasons why letter for those who can’t keep up with the jargon).

The client in question has an IFA who organised the policy and who will show as the agent on The Pru’s records. The letter refers clients to The Pru’s helpline while an accompanying leaflet first refers them to a Halifax line and tells them to “pop into your local Halifax branch to find out more”. On page five of this leaflet we again find helpline numbers and then on page six it says: “Call IFA Promotions to find a financial adviser in your area”.

Not only have The Pru and Halifax bypassed the holding agent but they have completely ignored, as far as I can see, compliance procedure, in directly referring the client to a lender.

My colleague’s complaint was met with the response that The Pru was trying to give options. It said it receives nothing from Halifax but that Halifax contributed to the cost of the mailing. I bet it did.

As an IFA, if I wanted to send a letter to my clients (and The Pru is sending this to your clients, not its own) advertising a remortgage facility available with one lender and that lender paid for the mailshot, do you think it would be allowed? Answers on a pinhead (aka an FSA employee) please. If anyone wants to see the correspondence, they are welcome – be warned it will land on your client’s doorstep.

Prudential is already in the Hall of Shame for ignoring applications already in progress. Halifax may soon be joining it.