Irish Life Savings Complaint

christeb

Hi,
I started an Irish Life savings plan last year, making monthly payments into it. Having only recently discovered how to log in online (I know my fault) and check the details (as I received no statements of performance or current balance etc. in the mail), I discovered a no. of things which are not satisfactory.
Firstly, the fund is down ca. 20% since I started (OK not their fault, although my advisor said the fund in question was low when I started the fund, but I'm aware that its my own decision etc...)
Secondly, I discovered the amount I was putting in per month was automatically being deducted 4.5%. Now I'm aware of investment managers' fees etc, but aren't these normally max 1.5% (eg Rabobank etc.)? Then when I complained to my IL financial "advisor", I was informed by email that:

"This is due to the allocation that is applied to each premium.
The regular allocation is 95% but I had managed to get you a higher
Allocation of 96%...
This is basically a charge that is taken to run and manage each
Policy."

Now I do plan to call the IL representative but I'm wondering has anyone has a similar experience or what you would recommend? I find the fact that the individual "managed" to get me 96% especiallly shady. I don't recall signing anything which meant ca. 5% of my hard earned money would be automatically deducted...
I was thinking maybe small claims court if nothing can be resolved?
Thoughts?

sofireland

Well the 5% charge on regular premiums is pretty industry standard for unit linked savings plans, however your advisor is obliged to make you aware of these charges, and the fund management charge before you sign up for the plan. He may have gotten you this reduced to 4% by foregoing some commission.

Also with regard to these, they normally send you an annual statement of account rather than one a quarter. Giving you access online is to allow you to check before you receive it in the post.

You have to go through the financial institution involved internal complaints procedure before you can go further, ie ombudsman. I would make a complaint to IL and see what they come back with.

broker2008

There are a number of components to a savings policy:

Commission, allocation rate, policy fee, bid/offer spread, size of premium and management charge.

If the savings policy name is Signature Saver (and not BonusSave Plus), there is no bid offer spread; policy fee is €4 per month.

Based on the info provided, you may be invested in the Consensus Fund, which Irish Life classify on their documentation as medium and not low risk and has 1% management charge. A 4.5% entry charge is mentioned which might mean that you are paying in excess of €750 per month to the policy to arrive at an allocation of 96% per annum.

Before taking out the policy you may have received a Customer Information Notice, which gives full details of the various components within the policy. Failing that you should have received a Welcome Pack after the policy was initially set up which would include the Plan Schedule, a T&C booklet, copy of the Signature Savings Booklet and a Customer Information Notice (which would contain Projected benefits under the policy or a similar policy). These documents are simply written compared to other companies. You would have also been notified that you had 30 days after receiving the Welcome Pack to cancel the policy.

The reduction in the value of your policy is due to the above charges and probably not due to investment markets. The breakeven point in a similar type of policy could be 28 months however the Irish Life documentation is clear in that they recommend a savings period of 5 years or more.

What are your options now ? Well depending on how long the policy is in force, you may be able to cash in, most certainly at a loss. Reduce premiums to say €250 per month or take a premium holiday which may have other consequences. Otherwise keep your policy and pay the premiums.

If there is an issue with the sale you should in the first instance make contact with the Customer Services Department, Irish Life, Lower Abbey Street, Dublin 1.

Hope that helps and do let us know the outcome.

christeb

Hi guys, thanks for the information

Its a bonussave plus account, and I am paying over €750 currently (although at a period last year I was paying under €750 and the charge still applied...
I need to go home and check over the documentation to see if I have been informed of the charges involved.
As a slight aside, surely this is not a great way to save overall? I know there is a longterm commitment involved, but starting out at a 4-5% loss isn't great. I also have a Sharewatch trading account invested in a smaller amount of shares, if I had have known about the above I would have out the money on deposit until a reasonable sum had built up, then invest it in one or a few shares directly, wouls that not seem like a more sensible way to proceed? As it stands, the IL account is frozen, if the charges are justified I think I will cash out or not make any more payments, as I think ca. €45 going straight to IL (if I'm paying €1,000 regularly) is quite disgraceful. I suppose I'm not quite sure right now, I'm relatively new and naive to this game!
Any further thoughts?

broker2008

Well the BonusSaver Plus is a little more complicated in that a bonus of 25% of total regular payments made in year one is paid as a one off bonus at the end of year five......if you don't stop paying premiums amongst other things. How much have you paid in ? The brochure clearly states that if you cash the policy in the value may be worth less than you put in and they recommend the BSP as a savings plan for five to 10 years or more. The standard charge on the policy is 1.75% every year plus a standard 5% charge on each regular payment. All the other documents mentioned above would also be relevant for this one.

I would ask for the surrender value and consider cutting your losses as by the sounds of it you won't be committed to the large term savings aspect of the policy and anyhow you have probably lost the bonus at this stage. Let us know the comparable values when you get them.

unclebill98

TBH,

I'll be very surprised to find that the charges where not brought to your attention when you where taking out the policy. I would not be surprised if they present you with your signature on a "Policy Charges Explained" piece of paper.

Banks really cover there backs when it comes to ANY long term investment plans. Years down the line the bank/you may well have to look at the paper work of your policy and its very important that the paper work is carried out and filed correctly.

Irish Life, I know 1st hand that they have you go through all the paper work and fully explain what your getting into. The Ombudsman does not take kindly to the bank messing people about when it come to paperwork.

Example, Man defaults small personal loan. Bank brings matter up to solicitor level. Bank can not produce the Credit Agreement..... Bank wipes off loan. Yes it was only a small amount, but Banks know only too well what happens if/when the **** hits the fan....they'll have all the t's crossed and i's dotted... No bank staff will want the finger pointed at them.

Lastly, most policies like yours are very long term. You may find the charges hard to take, but the exit fee will be even worse.

christeb

Just logged in to check, I've paid in €21,900 total. This translates in €21,138 after the 3-4% charge is taken off. Current cash-in is €17,325 (this fluctutates by a couple of hundred every day, depending on the exact value at any given time). So I'm obviously down, I'm aware of the state of the market etc. and I'm not bitter (even though my advisor told me the markets were down when I entered and it was a good time to start).
So any advice. I'm going to check up on the paperwork tonight, but assuming its all there (which I'm sure it is-GRR), what would be your advice. As mentioned earlier, I have a sharewatch account and I was thinking of lumping the lot into Ryanair, given the current state of the market (I know this is slightly off the forum topic...). I could comfortably stay in the plan for the next 4 years until it "matures", but I just feel it would be serving me better directly invested somewhere.

It was mentioned on another topic, that funds like these provide the IFSC with 10,000 jobs. OK, that's a bit of an overstatement, but I think there is a grain of truth there...

Any further comments much appreciated...