Here is an interesting bit of late night product analysis worth looking at.....
The latest BCP tracker bond Split Absolute Return Bond is being heavily marketed on past performance and by all accounts is selling well around the country.
It can be purchased as a straight deposit tracker or can be wrapped in a pension/ARF Wrapper
As a stand alone deposit tracker its a fixed term deposit with Bank of Ireland that pays out a fee of 6.04% which is included in the terms of the structure.
BCP retain 2.54% and an intermediary who sells the product receives 3.5%.
The BCP brochure includes the following disclosure in the small print
"BCP will manufacture, distribute and administer the BCP 110 Absolute Return Bond. For this BCP will receive a fee of 2.54% or c254 and intermediaries will receive a fee of 3.5% or c350."
All straight forward until we look a bit further............
This product can be wrapped in an Irish Life ARF or pension contract. When wrapped in an ARF policy , brokers can currently earn 5% commission from Irish Life .
The disclosure of charges and commission to the customer on the Irish Life personal illustration will only refer to the charges at the ARF product level (ie the 6.04% charge at the deposit level is not included in the ARF policy disclosure table. The end customer will receive the BCP brochure inserted into the Irish Life product literature. Is this practice in the spirit of disclosure requirements.
One could argue strongly that the customer is left in the dark when it comes to the look through basis of commission paid to the broker.
This wrapped product gives the broker potential to earn double commission - up to 8.5% or €85000 on a €1m ARF
Commission paid by BCP 3.5%
Commission paid by Irish Life 5%
Total initial commission 8.5%
Apart from the lack of total commission disclosure another worrying feature is the lack of total product charge disclosure on a look through basis.
There are so many parties involved in the product structure its virtually impossible to calculate the total charge on this product - all we can be sure of is that the customer is paying a heavy price.
I wonder if Irish Life and / or Bank of Ireland are aware of this practice - have we not learnt anything from our past mistakes?
The latest BCP tracker bond Split Absolute Return Bond is being heavily marketed on past performance and by all accounts is selling well around the country.
It can be purchased as a straight deposit tracker or can be wrapped in a pension/ARF Wrapper
As a stand alone deposit tracker its a fixed term deposit with Bank of Ireland that pays out a fee of 6.04% which is included in the terms of the structure.
BCP retain 2.54% and an intermediary who sells the product receives 3.5%.
The BCP brochure includes the following disclosure in the small print
"BCP will manufacture, distribute and administer the BCP 110 Absolute Return Bond. For this BCP will receive a fee of 2.54% or c254 and intermediaries will receive a fee of 3.5% or c350."
All straight forward until we look a bit further............
This product can be wrapped in an Irish Life ARF or pension contract. When wrapped in an ARF policy , brokers can currently earn 5% commission from Irish Life .
The disclosure of charges and commission to the customer on the Irish Life personal illustration will only refer to the charges at the ARF product level (ie the 6.04% charge at the deposit level is not included in the ARF policy disclosure table. The end customer will receive the BCP brochure inserted into the Irish Life product literature. Is this practice in the spirit of disclosure requirements.
One could argue strongly that the customer is left in the dark when it comes to the look through basis of commission paid to the broker.
This wrapped product gives the broker potential to earn double commission - up to 8.5% or €85000 on a €1m ARF
Commission paid by BCP 3.5%
Commission paid by Irish Life 5%
Total initial commission 8.5%
Apart from the lack of total commission disclosure another worrying feature is the lack of total product charge disclosure on a look through basis.
There are so many parties involved in the product structure its virtually impossible to calculate the total charge on this product - all we can be sure of is that the customer is paying a heavy price.
I wonder if Irish Life and / or Bank of Ireland are aware of this practice - have we not learnt anything from our past mistakes?