ABBEY said yesterday it would not be paying an annual bonus on its with-profits fund for the third year in a row.
Instead it will abolish exit penalties on many policies - which are imposed if a customer takes money from their bond early, before the end of the term.
Analysts said the move, and the relatively poor performance of the funds compared with others, should encourage many customers to think about surrendering their policies and investing elsewhere.
Overall, Scottish Mutual and Abbey National Life with-profits funds grew by 9.5 per cent last year, while Scottish Provident UK with-profits funds grew by 10.5 per cent over the same period.
Abbey announced last July that it would place a priority on addressing the exit penalties for its with-profits funds before re-introducing annual bonuses.
This would allow the company to continue to treat all policyholders within the fund fairly and help ensure the long-term stability of the fund, it said.
Yesterday's announcement affects with-profits policies for Abbey National Life, Scottish Mutual (including Scottish Mutual International) and Scottish Provident (including Scottish Provident Ireland), except where policies had guaranteed bonuses, which will still be paid.
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules hereComments are closed on this article