A UK newspaper report has accused retail bank Abbey of penalizing investors who have with-profits bonds by charging massive fees when they wish to cash their investments in.
The fees are known as market value reductions, and they are being applied to with-profits bonds held by Abbey Life or Scottish Mutual, both subsidiaries of the Banco Santander-owned Abbey.
The Daily Mail reports that the controversial fees are applied by insurance companies to help them claw back recent losses caused by a slump in the stock market. In this case, Abbey is apparently levying charges that could see as much as 14% wiped off investors’ funds when customers ask to get their money back, the newspaper claims.
Abbey is on the verge of disposing its with-profits bonds business to Resolution Life, but it says that the imposition of the fees is unrelated to that transaction.