This document is designed to explain what the PPFM is and how it relates to with-profits policies.
Companies who currently or at some time in the past have offered with-profits investments publish a document called the ‘Principles and Practices of Financial Management’ (PPFM) which sets out the way in which they manage the with-profits fund. PPFMs are designed to provide the necessary information for expert commentators and the Financial Services Authority (FSA) to appraise the management of a with-profits fund.
In addition, for policyholders and the general reader, the provider will issue a guide(s) to the management of the with-profits funds. Each year, an annual report is also published for the with-profits policyholders describing how the company has complied with the principles and practices detailed in their published PPFMs.
These are high level statements of the standards that the product provider will follow in the management of their fund, how they intend to manage the fund over the longer term, and how they expect to respond to longer-term changes in the business, regulatory and economic environment.
The principles are not expected to change often, however changes may be made and three months’ advance written notice will usually be given to with-profits policyholders.
These describe a product provider’s approach to managing a with-profits fund and to responding to shorter-term changes in the business, regulatory and economic environment. In other words, the practices describe how they intend to follow the principles in the day-to-day management of the fund.
The practices can be changed and policyholders will be notified within a reasonable timescale. Notice can be included in annual statements sent to policyholders.
Skandia With-Profits AnalyserThe Skandia With-Profits Analyser is available through Skandia Investment Solutions. Visit skandia.co.uk/adviser to get started.
Skandia does not offer with-profits policies. We have provided this summary for background information and accept no liability for actions taken or refrained from being taken based on the information contained in this or related documents.
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