‘Writing was on the wall’ for Scot Wids offshore bond unit

The closure of Scottish Widows’ offshore bond business Clerical Medical International to new business is not a “surprise” as the “writing was on the wall” for the unit following the merger of the two brands in 2009, advisers have said.

Scottish Widows announced yesterday (7 February) that it has decided to withdraw from the offshore bond market by closing CMI to new business from 30th March 2012. The company said it was instead planning to focus on launching new annuity and protection products in the advised space.

Alistair Cunningham, financial planning director of Surrey-based Wingate Financial Planning, claimed that CMI may have been closed to new business simply due to branding and that the “writing was on the wall” as soon as the firm was merged with Scottish Widows.

Mr Cunningham claimed there is “no shortage” of places to put offshore bonds and highlighted that there was more than 100 providers active in the market, particularly highlighting Friends Provident, Scottish Life, Canada Life, Aegon, Standard Life and Axa.

He said: “One concern I have is unlike a pension or Isa, offshore bonds are not transferable so it is effectively for life. Sometimes we consider divorcing the offshore bond from the investment strategy and put it elsewhere because it is not transferable.

“It’s practical to have the two separate as as the underlying investment does not have to be with it.”

Ian Lowes, managing director of Lowes Financial Management, said: “This is déjà vu all over again as it closed to new business about 10 years ago.

“Previously it felt like it was no longer viable but I don’t know the reasons this time. It must be frustrating for IFAs as it was closed without notice before and it may be the same again.”