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Life Insurance -
FSCP urges improvements to zombie funds - 11/10/2007
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Investors in so-called 'zombie funds' - funds from life insurance companies which are closed to new business - need to be treated better by life insurance firms, the Financial Services Consumer Panel (FSCP) have said.
A lack of clarity of information about investors' savings has been detected by the panel, as has the fact that the funds generally offer poor returns, the Daily Mail reports.
According to the FSCP some £190 billion is invested in such funds by 11 million investors.
John Howard, of the FSCP, said: 'These are complicated products that consumers had little chance of understanding. Despite the work done by the Financial Services Authority to regulate this sector, many consumers remain suspicious and worried.
"The information sent out by firms is too often incomprehensible and it is almost impossible for most people to get advice about their policy."
Mr Howard added that, with market value adjuster fees required to move money out of zombie funds sometimes running as high as 20 per cent, some investors feel "locked in" to the products.
According to an independent financial adviser cited by the report, open funds generally offer higher returns to investors as well.
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