C&G cuts ties with insurance products

CHELTENHAM & Gloucester Building Society will become the first society to stop selling life insurance-linked products, including endowment mortgages, when its five-year tie with Legal & General ends in November, writes Vivien Goldsmith.

The society is turning its back on all investments covered by the Financial Services Act, and will confine itself to deposit-based savings and mortgages. The decision will save money on training and other compliance measures.

Customers who want an endowment policy or any other form of investment will be directed to an independent financial adviser.

The society began to distance itself from standard endowment mortgages three years ago when it started selling 'interest-only' mortgages, and giving borrowers freedom to choose how the loan would be repaid.

Andrew Longhurst, C&G chief executive, said: 'We will concentrate on delivering a quality mortgage service. It is a logical stance.'

C&G, the second society to link up with a life company, sells a Legal & General policy to only one in 12 home- buyers.

Nearly a quarter of mortgages are repayment loans and 60 per cent of its mortgages come through financial advisers, so the society earns no commission on these even if an endowment is taken out.

The move will save about pounds 500,000 a year in training staff to sell life insurance. Other societies are unlikely to follow suit.