The report, which was based on information on 22 ILAS products collected from eight insurance companies last month, said the range of choice resulted in consumers’ attention being “therefore drawn to the fee structure and calculations of these products”, which “many may not…fully understand”.
An item posted yesterday on the Consumer Council’s website also noted that the Consumer Council received 29 ILAS-related complaints in the first seven months of this year, an increase of nine cases, or 45%, over the same seven-month period in 2012.
The complaints mainly concerned sales practices and price disputes, the Consumer Council said.
As reported, ILAS products have been the firing line recently, after the introduction of more onerous compliance rules and commission disclosure made the charging structure and other elements of the products’ composition more visible.
The new rules obliged financial advisers selling ILAS products to begin disclosing remuneration details to their clients by 30 June.
Other points highlighted in the Consumer Council report:
- The majority (17) of the ILAS plans reviewed were found to impose surrender charges which are applicable up to the first 10 years of the premium payment term, in the event of an early redemption or withdrawal; "in the worst scenario, the highest charge could reach up to 100% of the surrender or withdrawal sum in the first year of the premium payment term…in other words, a total loss, and consumers do not even get back their principal invested"
- The levels of fees and charges varied significantly between insurers, with the administrative charges being asked ranging from US$50 to US$90, or an annual rate of 0.5% to 9% of the premium or policy account value
- Fund management charges were found to vary "from 0.2% to 3% per annum of the net asset value of the underlying funds"
- All the insurers surveyed "replied positively" to the new disclosure regime, with one having undertaken "to disclose the information, on its [own] initiative, without [waiting to be asked by] customers"
More guidance and information on the findings of the Consumer Council report may be found on the Consumer Council’s website.
