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FOR FINANCIAL ADVISERS ONLY

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Changes to our pre-RDR Portfolio Bond products

The switchover to Wealth Interactive will bring some important changes to our pre-RDR Portfolio Bonds. The main difference is that you will be able to carry out many transactions online.

However, you need to be aware of the following:

1) Asset transfers

All asset transfers for policies already held on Wealth Interactive are unaffected and will continue as normal. Likewise, all new business is now being written on Wealth Interactive, so new bonds are unaffected.

We stopped any new asset transfers with effect from 19 September 2014 for bonds held on our legacy administration system. Top-ups where the investment is to come from an asset transfer will resume on Tuesday, 28 October 2014. All other asset transfers will resume on Monday, 10 November 2014.

Please submit asset transfer requests in the normal way. We will check each request and respond where there are queries or missing information.

2) Charge package codes

We have updated our charge package codes for Wealth Interactive. As a result, your pre-RDR charge package codes will no longer work on the new system and we will not be able to process applications without the new code. Your Old Mutual International Area Sales Manager can provide you with your new replacement code.

3) Dividends from income share classes

Currently, if your client invests in an income share class, we reinvest any dividends into units, unless you specifically request cash to be paid into the transaction account. For Portfolio Bonds administered by Wealth Interactive, any dividends on income share classes will automatically be paid into your client’s transaction account. These dividends can remain in the transaction account to cover fees and charges or be reinvested, which will incur dealing charges.

4) Reduced minimum premiums

We’ve taken the opportunity to reduce the minimum amount required for additional premiums and for asset trades:

Product Minimum top up  Minimum deal size 
Old Mutual International
Executive Investment Bond £2,500, US$ 3750, €3750, HK$30,000, SG$5,000, CHF5,000, Aus$5,000, JPY500,000,DKK25,000, SEK30,000, NoK25,000,NZ$6250, C$5,000 £2,500, US$ 3750, €3750, HK$30,000, SG$5,000, CHF5,000, Aus$5,000, JPY500,000,DKK25,000, SEK30,000, NoK25,000,NZ$6250, C$5,000
Collective Investment Bond No change £1,250, US$ 1,875, €1,875, HK$15,000, SG$,2,500, CHF2,500, Aus$2,500, JPY250,000,DKK12,500, SEK15,000, NoK12,500,NZ$3,125, C$2,500
Collective Redemption Bond No change £1,250, US$ 1,875, €1,875, HK$15,000, SG$,2,500, CHF2,500, Aus$2,500, JPY250,000,DKK12,500, SEK15,000, NoK12,500,NZ$3,125, C$2,500

5) Invest in the direct funds only

Old Mutual International’s range of internal life funds will not be available for new Portfolio Bonds. Instead the direct funds will be available.

6) Transaction account management

We have updated the Policy Terms to clarify the way that the transaction account operates and how you and your clients can manage the way Old Mutual International’s charges, Fund Adviser Fees and regular withdrawals are paid from the policy.

It’s important to remember that it is your and your client’s responsibility to make sure that there are sufficient funds available to meet these payments. If there are insufficient funds to pay the Fund Adviser Fees or regular withdrawals, then we will stop these payments.

If there are insufficient funds to cover Old Mutual International’s charges, we will still deduct them from the transaction account, resulting in the account becoming overdrawn.

To help ensure continuity of withdrawal and fee payments after your Policy is moved onto Wealth Interactive, Old Mutual International/Old Mutual International Ireland will adopt a one-off process to automatically apply a ‘Nominated Asset’ and/or ‘Charge Deduction Asset’ where you have not selected one.

> Download a document which explains how to manage fees, charges and withdrawals

We have introduced ways for you and your clients to ensure that these charges can be met, as described below:

i)  How to ensure your client has enough money to fund Old Mutual International’s charges:

A Charge Deduction Asset (‘CDA’) can be chosen. When selected we will proceed as follows:
– Charges will be deducted from the transaction account, using any available cash balance first.
– If after deducting charges there is a negative transaction account balance we will then raise an amount equal to the balance from the CDA. Upon receipt of the sale proceeds the negative balance will be cleared.

If your client does not nominate a Charge Deduction Asset, or where the CDA has insufficient value to cover the charges, we will still deduct charges from the transaction account. If there is insufficient cash to cover the charges this will result in a temporary overdraft. We will advise you and your client through the quarterly valuation statement if this has happened. You will also be able to see this via your Wealth Interactive online service account. If the overdraft remains uncleared after 30 days we will then sell assets to clear the overdraft as set out in the Policy Terms. Therefore if a CDA is not nominated it is important to ensure that the transaction account has sufficient cash to cover charges.

ii)  How to ensure your client has enough money to fund regular withdrawals:

If your client is taking regular withdrawals from their bond, they must nominate an asset from which the withdrawals will be taken (this will be called a ‘Nominated Asset’). Your client  can instruct us to use the Transaction Account as the Nominated Asset.

Their ‘Nominated Asset’ must be received by 15 October 2014. If we have not received their response by this date then when their Policy is moved onto the Wealth Interactive system, as a one-off process to help ensure withdrawals continue,  we will automatically use the highest value liquid asset as at 30 September 2014 which is still available to use as the ‘Nominated Asset,’ irrespective of whether this would result in disproportionate costs of sale. If your client does not have sufficient cash in their transaction account to cover 6 months of regular withdrawals, we will select the transaction account as the ‘Nominated Asset’ before we  use the highest value liquid asset as the Nominated Asset.

An Investment Dealing Charge will apply to the sale of any assets.

If in future the Nominated Asset has insufficient value to cover the withdrawal, or there’s not enough credit balance in the Transaction Account (where this is the Nominated Asset), the withdrawals will stop.

We will reinstate them as soon as your client provides details of a new Nominated Asset to us, or there is enough money in the Transaction Account to cover the withdrawal, where this is the Nominated Asset. Your client  can ask for missed payments to be paid when they select a new Nominated Asset.

Please note that any existing overdraft on the transaction account will not be impacted by the sale of the Nominated Asset to fund withdrawals.

The above provisions do not apply to your Policy where an Authorised Custodian has been appointed.

iii)  Fund Adviser Fees and Ongoing Service Fees:

If your client pays fees to a fund adviser/investment adviser representative, this is classed as a withdrawal from their policy. Your client can select which asset the withdrawal is made from (this is called a ‘Charge Deduction Asset’). The Transaction Account cannot be selected as a Charge Deduction Asset for payment of fees. Therefore, if your client wants to use the credit balance in the Transaction Account for the payment of fees, they should not select a Charge Deduction Asset.

Your Charge Deduction Asset request must be received by 15 October 2014.  If we have not received your response by this date, when your Policy is moved onto the Wealth Interactive system, as a one-off process to help ensure fees continue to be paid we will automatically use the Transaction Account where there is enough credit balance to cover 6 months of  fees and charges. If, however, there is not enough credit balance in the Transaction Account we will automatically use the highest value liquid asset as at 30 September 2014 which is still available to use as the Charge Deduction Asset. This could result in a disproportionate cost of sale.

For future payment of the fees we will continue to use your selected Charge Deduction Asset (including the highest value liquid asset where this applies)  or the credit balance in the Transaction Account where you have not selected a Charge Deduction Asset, unless you send a  request to change the Charge Deduction Asset.  

If there is not enough value in Charge Deduction Asset to pay the fee, the fee will not be paid. Where a Charge Deduction Asset has not been selected and  there is not enough credit balance in the Transaction Account to cover the fee, the fee will not be paid.

An Investment Dealing Charge will apply to the sale of assets.

Where you have appointed a Fund Adviser, it is your responsibility to inform the Fund Adviser of these changes, to ensure that your Fund Adviser acts in accordance with them. Where the Fund Adviser is also your Financial Adviser noted on our records we have already sent them a copy of this document.

Please note, if a Charge Deduction Asset is chosen to fund fees, any accrued overdraft on the transaction account will be cleared when the Charge Deduction Asset is sold to cover fees.

The above provisions do not apply to your Policy where an Authorised Custodian has been appointed.

Your client's Charge Deduction Asset request must be received by 15 October 2014.  If we have not received their response by this date, when their Policy is moved onto the Wealth Interactive system, as a one-off process to help ensure fees continue to be paid we will automatically use the Transaction Account where there is enough credit balance to cover 6 months of  fees and charges.  If, however, there is not enough credit balance in the Transaction Account we will automatically use the highest value liquid asset as at 30 September 2014 which is still available to use as the Charge Deduction Asset. This could result in a disproportionate cost of sale.

For future payment of the fees we will continue to use their selected Charge Deduction Asset (including the highest value liquid asset where this applies)  or the credit balance in the Transaction Account where they have not selected a Charge Deduction Asset, unless they send a  request to change the Charge Deduction Asset. If there is not enough value in the Charge Deduction Asset to pay the fee, the fee will not be paid. Where a Charge Deduction Asset has not been selected and  there is not enough credit balance in the Transaction Account to cover the fee, the fee will not be paid.

An Investment Dealing Charge will apply to the sale of assets.

Where your client has appointed a Fund Adviser, it is their responsibility to inform the Fund Adviser of these changes, to ensure that their Fund Adviser acts in accordance with them.

Please note, if a Charge Deduction Asset is chosen to fund fees, any accrued overdraft on the transaction account will be cleared when the Charge Deduction Asset is sold to cover fees.

The above provisions do not apply to the Policy where an Authorised Custodian has been appointed.

iv)  How do stopped withdrawals or fees get reinstated?

Withdrawals:

As soon as we receive details of a new Nominated Asset (or there are sufficient funds in the transaction account where this is the Nominated Asset) to cover the withdrawal, and you or your client informs us that you want regular withdrawals to start again, they will re-start at the same level on the same day of the month as they previously occurred.  We will not back-pay any missed regular withdrawals.

Fund Adviser Fees:

As soon as we receive details of a new Charge Deduction Asset, or there are sufficient funds in the transaction account to cover the payment, they will automatically re-start at the same level on the next quarterly payment date. We will not back-pay any missed fees.

Will dealing charges apply?

Unless the transaction account is used, standard dealing charges will apply for trades where a CDA is sold to cover Old Mutual International’s charges and/or fees. Standard dealing charges also apply where Nominated Assets are sold to cover regular withdrawals. To avoid disproportionate costs, a trade will only occur when the value of the transaction equals or exceeds the product minimum trade size.

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