Lies, damned lies and claims of falling charges

For The past two years, increasingly weary punters have been treated to a charade by the Personal Investment Authority, the financial watchdog. Last week - as in 1996 - the PIA published a survey which showed, or so it claimed, that charges on the most common policies sold to investors had fallen slightly.

The regulator wants us to believe this, because for two years it has been implementing rules forcing companies to disclose the charges they impose on the policies they sell us.

In theory, the new disclosure regime was meant to deliver much greater competition. Savers would be able to compare products and choose the cheapest ones, an option previously denied them. So optimistic were the regulators that there were even predictions of a pounds 1bn bonanza.

The real picture is far more murky. Yes, there has been an overall cut of 3.9 per cent in the charges levied by PIA members, the life companies that sell the products. But this is nothing more than sleight of hand. For a start, a cut of 3.9 per cent is insignificant. If you charge pounds 1,000 on a policy and cut pounds 39 off the bill, punters are hardly going to cheer.

In any case the cut is an average figure. The reality, as the PIA itself has admitted, is that a minority of the most outrageously expensive companies - which did no business because of their high charges - have been dragged, screaming, into the real world.

The vast bulk of companies charge as much as they ever did, which is one heck of a lot. And a minority have pushed their prices up, not down. What's more, the PIA's figures are highly suspect. As this paper has argued, charges can be imposed at any point in the lifetime of a product. You can charge a lot at the start and tail off the fees at the end of a 25-year term.

The average costs will look cheap unless - as is often the case - policyholders stop paying in after a few years and end upbeaing the brunt of the charges.

In other words, millions of people will pay for several years into savings and other policies which will deliver even less when they finally pay out than some of the worst-charging building society accounts.

It is not surprising, therefore, that despite the risks involved in buying products over the telephone, investors are turning to providers such as Virgin and Scottish Widows for pensions and whatever else. Simpler and cheaper products can be an attractive proposition, as even Eagle Star discovered. Traditional companies will discover to their cost that we will have no more of this trickery.

Despite this new openness, however, Eagle Star's press release, which helpfully contained a chart to compare its performance with that of its rivals, left a little to be desired. In one section, it compared itself to Virgin, suggesting that like Richard Branson's company, it charges a pounds 2 monthly fee on the fund. Except that Virgin's fee is only paid when contributions are made. So if you halt payments, there is no monthly fee to be paid, unlike Eagle Star.

Whoops. Perhaps some habits are hard to break.

AT LAST, the Halifax has announced its free share proposals. They include a minimum 200 shares, worth up to pounds 900 for both savers and borrowers. The maximum is almost 1,200 shares on deposits of pounds 50,000 or more, worth up to pounds 5,400, according to the society's best estimates. The voting result is not really in doubt.

Failing that, members should make sure that the amount in their account on 24 February this year equals the level on 25 November 1994. Read the society's weighty, but informative, document now being mailed to all members.

In weeks to come, we will explain in more detail what people can do with with the shares themselves. Meanwhile, if you have any doubt about your eligibility, call 0800 527327.

Start your day with The Independent, sign up for daily news emails
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Guru Careers: Graduate Editor / Editorial Assistant

£16 - 20k: Guru Careers: A Graduate Editor / Editorial Assistant is needed to ...

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Day In a Page

Raif Badawi: Wife pleads for fresh EU help as Saudi blogger's health worsens

Please save my husband

As the health of blogger Raif Badawi worsens in prison, his wife urges EU governments to put pressure on the Saudi Arabian royal family to allow her husband to join his family in Canada
Birthplace of Arab Spring in turmoil as angry Tunisians stage massive sit-in over lack of development

They shall not be moved: jobless protesters bring Tunisia to a halt

A former North African boom town is wasting away while its unemployed citizens stick steadfastly to their sit-in
David Hasselhoff's new show 'Hoff the Record': What's it like working with a superstar?

Hanging with the Hoff

Working with David Hasselhoff on his new TV series was an education for Ella Smith
Can Dubai's Design District 'hipster village' attract the right type of goatee-wearing individualist?

Hipsters of Arabia

Can Dubai’s ‘creative village’ attract the right type of goatee-wearing individualist?
The cult of Roger Federer: What is it that inspires such obsessive devotion?

The cult of Roger Federer

What is it that inspires such obsessive devotion?
Kuala Lumpur's street food: Not a 'scene', more a way of life

Malaysian munchies

With new flights, the amazing street food of Kuala Lumpur just got more accessible
10 best festival beauty

Mud guards: 10 best festival beauty

Whether you're off to the Isle of Wight, Glastonbury or a local music event, we've found the products to help you
Unai Emery’s passion for winning and eye for a bargain keep Seville centre stage in Europe

A Different League

Unai Emery’s passion for winning and eye for a bargain keep Seville centre stage in Europe, says Pete Jenson
Amir Khan and James DeGale’s remarkable Olympic performances were just the start of an extraordinary journey - Steve Bunce

Steve Bunce on Boxing

Amir Khan and James DeGale’s remarkable Olympic performances were just the start of an extraordinary journey
Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf