Which? slams with-profits penalties

As Norwich Union and Friends Provident introduce Market Value Reductions (MVRs) on over 1.4 million with-profits policies, Which? personal finance campaigner, Dominic Lindley, says: "These penalties will come as a bitter blow to with-profits policyholders. There is no transparency about how they are calculated and many policyholders will not trust the company to apply them fairly.

"This could penalise those Norwich Union policyholders who had only stuck with the fund because of the promise of payouts from the reattribution and special bonuses.

"It may feed the impression amongst policyholders that when it comes to with-profits, what companies give with one hand they take with the other.

"It is essential that the FSA listens to the recommendations of the Treasury Committee and launches a comprehensive review of its regulation of with-profits funds.

"Anyone thinking of cashing in their policy should immediately contact their provider to find out when they would next be able to cash-in their policy without being subject to an MVR and consult an Independent Financial Adviser."