For about 20 years, I’ve held several offshore bond policies with Canada Life which were set up by my financial adviser.
Now I’m in my 50s and retired, I withdraw some cash from one policy every year to cover my living costs until I hit state pension age.
On 7 April, my adviser put in a request to withdraw a portion worth around £40,000, so I could pay for a new car as well as my funds for the next year.
To both of our surprise, he was told this would take a minimum of 24 working days, due to ‘unprecedented withdrawal requests’ – which would mean waiting until at least 12 May. I understood the usual turnaround time was three days.
I put in a complaint, but received an automated reply saying that Canada Life would respond in 10 to 15 working days.
It means I will need to cash out other investments to pay for the car, which is being delivered next week.
I also don’t like the idea of being prevented from accessing my investments for so long – especially at a time when stock markets are moving quickly because of turbulence surrounding the Iran war. Can you help? A.H, Worcs
Turbulent times: Investors are closely tracking their portfolios as markets remain volatile
Helen Crane, This is Money’s consumer champion replies: Plenty of investors are feeling skittish at the moment, with markets dropping in March and now staging a tentative recovery.
Just this week, fellow investment firms Aberdeen and Liontrust Asset Management both revealed investors had pulled funds worth £2.9billion and £836million in a three month period.
From your story it seems a similar situation may be playing out at Canada Life.
I’d be really interested to hear from other investors who have faced long waits to get their money out from any firm, and they can contact me at helen.crane@thisismoney.co.uk.
Of course, you were making a sensible, planned withdrawal to cover your living costs, rather than pulling all of your cash.
Investors are usually advised to keep their money in the markets, as time will often smooth out any short-term ups and downs.
However, in turbulent times you felt uncomfortable with the idea that you wouldn’t be able to access some of your money quickly if you felt you needed to, or in an emergency.
You were also concerned that your investments might lose value in the period after requesting the withdrawal, but before you received the cash.
Many investors would take comfort in knowing this, even if it would take a serious market dip for them to take the nuclear option and withdraw.
An offshore bond is technically a life insurance policy, in that it pays out a small amount on the owner’s death.
However, money put in the policies is invested in the stock market via funds, and most customers effectively use them as an an investment account.
Doing so can have tax advantages for people who have already maximised other tax-free options such as Isas.
Investors are normally able to take out money whenever they want, which made these a good option for your retirement plan.
You had a routine for the last few years whereby you would take out money at the beginning of the new tax year in April, and this had not failed you so far.
It says on Canada Life’s website that money is paid after three days of ‘receiving the last outstanding requirement.’
This essentially means filling in all the right forms including a signed copy of your withdrawal request, and anti-money laundering documents – which you said had all been done in your case.
Canada Life later disputed this though, and claimed the three-day timeline for paying money out only starts after the trade had completed, i.e after your investments had been successfully sold.
Depending on the type of investment, there can often be a lag between requesting to cash out and actually receiving the cash.
Different firms have their own timescales, but it is rare to wait more than seven working days and many firms pay out in one or two.
Taking 15 working days to even respond to a complaint about a withdrawal is certainly not good enough.
I contacted Canada Life to ask if you would really have to wait 24 working days for your money.
It blamed the tax year-end for the delay, rather than the stock market turbulence.
But regardless, after I got in touch it had paid your full £40,000 settlement within days.
A Canada Life spokeswoman said: ‘We understand the worry and inconvenience caused to A.H when making this partial surrender request.
‘We recognise how important the timing of this transaction was for him and we are sorry for the distress this matter has caused.
‘We can confirm [the] surrender payment has now been paid in full. Our complaints team is currently reviewing his case to determine whether any redress is appropriate.
‘A significant increase in transaction requests around the tax year-end period has led to exceptionally high demand for our customer service teams.
‘Surrenders and assignments of policies have been the areas most affected, and we have brought in additional specialist resource to handle these complex transactions and help restore normal turnaround times during this period.’
The firm also said that it would consider your request for compensation and contact you if it decided any was due.
I’m glad this is sorted and you can motor on with your new car purchase.
One would hope that by next year, stock markets will be calmer and you won’t have this problem – but at the moment, who can say…