Looking back in anger

I hate "more in sorrow than in anger" conversations. These are the type where the person you are speaking to makes out that you have made a mistake but it was only to be expected.

Such a conversation took place at an awards ceremony hosted this week by the Association of British Insurers, the industry trade body.

A Scottish Amicable executive came to my table to take issue with the scathing comments in this column about the company's Bonus Bond, a fund which mimics the performance of the FTSE 100 share index. The column referred to the extremely heavy charges levied on the Bonus Bond, which are far in excess of those made for investors who put their money into similar tracker PEPs offered by, say, Legal & General and Gartmore.

The bond is only available to ScotAm policyholders who receive a payout as part of the company's takeover by Prudential. "Well, of course, you must understand that the likely payout to policyholders is likely to be far less than minimum payments accepted by the Gartmore and L&G schemes," was the gist of his sorrowful comments.

He is both right and wrong. The minimum contribution into L&G and Gartmore is greater than the average of pounds 550 to be paid to policyholders. But both those companies have confirmed they are happy to accept smaller regular premiums which cease after one or two months.

More important is another feature of the Bonus Bond. Here at The Independent, we ransacked our files to find the original press release announcing details of this bond. We couldn't find one.

ScotAm tells me that it didn't send one out because it chose to direct mail only its million-odd policyholders with the details instead. It claims it didn't want to be inundated by applications from non-members. As if.

Even more interesting is the fact that ScotAm deals almost solely with independent financial advisers. To get round the problem of advisers complaining that it was poaching their clients, ScotAm has paid 3 per cent commission to advisers for every customer who responded to the bond, whether the IFA gave advice on it or not. In other words, an adviser with, say, 20 ScotAm clients all receiving the average pounds 550 payout would receive pounds 330 for doing sod all. In fact, many advisers will have scores of such clients: their commission will rise commensurately. That may explain why IFAs were not exactly raring to condemn the company for its lacklustre product.

I offer this story as a parable of the financial services industry today. If its members want to "honour" journalists, as this week's shindig in London was meant to be all about, the least they should do is not to presume on our stupidity.

It is still not too late for ScotAm and Prudential, its ultimate owner, to apologise for what appears to be a case of sharp practice.

They should also offer their money back to any aggrieved policyholder. And I write this more in anger than in sorrow.