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Advisers claim that the letter, sent to clients in March 2009, could have panicked dozens of investors into crystallising their losses as some of these funds have since bounced, returning 30 per cent in the three months since the letter was received.

Intermediaries that contacted Money Management underlined the fact that Zurich should not have been even hinting at investment advice, irrespective of its treating customers fairly (TCF) obligations as a wrap provider.

Alan Smith, of London-based Capital Asset Management, said insurance companies need to realise where their role begins and ends.

He explained: "I knew nothing about this until I got a phone call from a client, an elderly lady in a panic. I got in touch with Zurich and they sent me the letter. Zurich has stepped across the line as it would not carry any responsibility for the advice.

"I would like to know what would have happened if my client said 'this is terrible' and called Zurich directly only to later find out that the fund has gone up 30 per cent. Who would she blame? They need to realise where their role begins and ends."

David Barnett, principal at London based DPB Independent Financial Services, agreed, calling on the Financial Services Authority (FSA) to take action.

He said: "If Zurich has sent a letter making a recommendation, to my mind that is giving advice. They should be sanctioned by the FSA. They should not be recommending anything at all to a client of an IFA."

The Sterling/New Star High Yield Bond fund was up 26 per cent as at 12 June 2009, while the Sterling/New Star Bond fund was up almost 16 per cent. The Sterling/New Star Higher Income fund returned a jaw-dropping 31 per cent.

The newly formed Henderson New Star said today (19 June) that it would advise all of its business partners to keep intermediaries in the loop at all times with regards to customer communications.

Referencing, the Sterling/New Star High Yield Bond fund, Laurie Jaques, head of sales at Henderson New Star, said: "This is a Zurich fund and we are an underlying asset within that fund. At Henderson, we write to clients and intermediaries in advance of all communications."

Today, Zurich maintained that the communications were made in the interests of TCF.

Sara Lister, spokeswoman for Zurich, said: "We can confirm that letters were sent (starting w/c 22/4) to all intermediaries of those customers who were invested in the Sterling/New Star Bond fund.

"In that letter we stated that we were closing the fund to new investors and listed their specific customers that this closure affected. We also publish all details of any fund closures on our intermediary facing website.

"Under the terms and conditions of their plans (and as part of TCF) we are obliged to tell customers the actions that are being taken on the fund they are invested in and always strongly suggest that they speak to their adviser.

"It is therefore unfortunate that it appears that some intermediaries have not seen any of our communications on this topic".

- Have your clients been affected by this? Have other insurers contacted your clients without your permission? Contact Joe McGrath on 020 7775 6664 or email Money Management – joe.mcgrath@ft.com