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
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Mortgage Advisor - OTE £95,000

£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...

SThree: Trainee Recruitment Consultant

competitive: SThree: Are you passionate about sales?Do you have a keen interes...

Recruitment Genius: Loan Adviser - OTE £30,000

£17000 - £30000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Day In a Page

Greece debt crisis: EU 'family' needs to forgive rather than punish an impoverished state

EU 'family' needs to forgive rather than punish an impoverished state

An outbreak of malaria in Greece four years ago helps us understand the crisis, says Robert Fisk
Gaza, a year on from Operation Protective Edge: The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas

Gaza, a year on from Operation Protective Edge

The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas
How to survive electrical storms: What are the chances of being hit by lightning?

Heavy weather

What are the chances of being hit by lightning?
World Bodypainting Festival 2015: Bizarre and brilliant photos celebrate 'the body as art'

World Bodypainting Festival 2015

Bizarre and brilliant photos celebrate 'the body as art'
alt-j: A private jet, a Mercury Prize and Latitude headliners

Don't call us nerds

Craig Mclean meets alt-j - the math-folk act who are flying high
How to find gold: The Californian badlands, digging out crevasses and sifting sludge

How to find gold

Steve Boggan finds himself in the Californian badlands, digging out crevasses and sifting sludge
Singing accents: From Herman's Hermits and David Bowie to Alesha Dixon

Not born in the USA

Lay off Alesha Dixon: songs sound better in US accents, even our national anthem
10 best balsamic vinegars

10 best balsamic vinegars

Drizzle it over salad, enjoy it with ciabatta, marinate vegetables, or use it to add depth to a sauce - this versatile staple is a cook's best friend
Wimbledon 2015: Brief glimpses of the old Venus but Williams sisters' epic wars belong to history

Brief glimpses of the old Venus but Williams sisters' epic wars belong to history

Serena dispatched her elder sister 6-4, 6-3 in eight minutes more than an hour
Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy