Treating Customers Fairly (TCF) is a key part of the FSA’s approach to principles-based regulation. The FSA has set out a series of outcomes that it expects both product providers and advisers to deliver for customers. The FSA website gives full details of these outcomes.
Legal & General is committed to fulfilling its TCF requirements and helping advisers help customers.

In May 2007 the FSA issued their 'Insurance Sector Briefing: Quality of post-sale communications in the life sector and availability of ongoing advice to with-profits policyholders' (PDF)  paper.

Adviser and insurer responsibilities

This paper requires both plan providers and advisers to help customers make informed decisions in relation to their With Profits investments. In particular, information should:

• Provide investment performance information so that customers (or their advisers) understand how their investment is performing.
• Enable customers to judge if the plan continues to meet their requirements.
• Remind customers of the key benefits of their plan, particularly if they are about to take action that could result in them losing these benefits.

Helping you

A large number of policies have been made available across the UK market over the last few decades. With the different approaches to providing With Profits policies and products, it would be difficult for advisers to know the detail of all policies available.

We believe there are key events during the investment journey that may require specific advice, for example, switching investments, pension transfers, early retirement, surrendering/early surrenders or taking Personal Retirement Plan benefits from age 60.  The information below will help you understand the key considerations when advising a Legal & General With Profits customer at these events.

This is not an exhaustive list. All customers are different and advisers should carefully consider, and be happy based on their own opinion, the specific advice/information required/provided for each individual.

Consideration	Key event(s) when this consideration may apply
A Market Value Reduction (MVR) may apply	Switching Pension transfers Early retirement Surrendering/early surrenders One off and regular withdrawals
The customer may lose out on investment growth if their policy has a guaranteed minimum annual growth rate. (Contractual Annual Interest/Contractual Minimum Addition applies, at varying rates, to certain policies depending on the year in which contributions/premiums were paid and the type of policy).	Switching Pension transfers Early retirement Surrendering/early surrenders
The customer may lose on their pension, if their policy includes a guaranteed annuity rate	Switching Pension transfers Early retirement (if the customer buys their pension from a different provider)
The customer may lose out on the opportunity of taking a guaranteed return on the original capital	Switching Surrendering/early surrenders
The policy may become non-qualifying for tax purposes and the customer may be liable for tax	Switching (Life policies only)Surrendering/early surrenders
The customer may lose life insurance and critical illness cover benefits that are built into their policy	Surrendering/early surrenders
There are various things Personal Retirement Plan customers should bear in mind if they are considering retiring earlier than 60. See the following Personal Retirement Plan factsheets for more information: Understanding your Personal Retirement Plan (Q21720) customer version - (PDF) What is a Legal & General Personal Retirement Plan (Q23709) adviser version - (PDF)	Taking Personal Retirement Plan (also known as Golden Years Plan) benefits from age 60

For further information and communications that will help customers make an informed decision about their policy, please view our With Profits literature.

Legal & General and With Profits

The following questions and answers may help you understand more about Legal & General's With Profits contracts:

What is a Market Value Reduction (MVR)?

An MVR is used to make sure that we treat all our With Profits customers fairly, whether they stay in With Profits or withdraw early. If a plan has a set end date, it is only applied where money is taken out of With Profits before the set maturity end date. Please note MVRs do not apply to benefits paid out on death.

We usually apply an MVR when investment conditions have been insufficient to support bonuses. In these conditions, we will apply a factor to reduce the amount of money switching or transferring out of With Profits to try to balance the interests of those leaving With Profits with the interests of those staying in With Profits to ensure, as far as possible, fairness for all. For further information on MVRs, please view our Understanding Market Value Reduction flyer (PDF).

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What is Contractual Annual Interest (CAI)/Contractual Minimum Addition (CMA)?

These are the names given to the annual amount of growth we have guaranteed to provide on certain contracts. These guarantees could be of significant value to the policyholder. CAI and CMA increase the value of plans each year by the addition of units, as described in the policy / plan documents. The amount of CAI and CMA is taken into account when calculating bonuses. This means policyholders who receive CAI may receive a lower annual bonus (or no annual bonus at all) than those who do not have CAI. This is so that their overall return does not exceed the amount we consider appropriate in order to treat all of our With Profits policyholders fairly. If CAI and/or CMA applies to your customer's policy / plan, it will be shown on their bonus notice.

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Which plans have guaranteed rates that can be used to turn the fund into a pension income (guaranteed annuity rates)?

Guaranteed rates apply to occupational plans taken out as a result of the High Performance Pension Plan and Personal Investment Plan for Executives (HP3/PIPE) conversion exercise in 1996 onwards. Many of these plans were converted to Executive Pension Plans, or to Section 32 Buy Out Plans. Personal Retirement Plans / Golden Years Plans also have annuity guarantees available from the client's 60th birthday.

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For more information on how we manage With Profits investments, you can read our customer friendly guides:

An introduction to unitised With Profits (Q24542)  PDF: 845KB
for customers whose plan number starts with UK, US, U, UP, 2, 3, 4 or 5

An introduction to conventional With Profits (W11928)  PDF: 1.16MB
for customers whose plan number starts with 0, 0T0, G or P

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