Stiffer rules due on second-hand policies

FIMBRA, the investor protection watchdog, will shortly tighten rules on buying and selling second-hand endowment policies, writes Sue Fieldman.

If you surrender a life policy, the return is often appallingly low. As a result, there has been a rapid multiplication of companies offering to buy and sell second-hand endowments. There are rules to regulate these operators, but there are grey areas, particularly about what has to be disclosed.

Richard Cockcroft, a spokesman for Fimbra, said: 'We do not think that anyone is providing spurious figures about the value of these policies, but whether they are in accordance with the rules must be in some doubt.'

Fimbra will be clarifying this. Meanwhile, Mr Cockcroft advises buyers and sellers to inquire about the basis of any figures. They should also ask for an illustration prepared in accordance with Lautro rules and obtain a figure for the current surrender value.