Financial Ombudsman: discussion

Pensions & annuities. Wrong advice to transfer out of SERPS, the suitability of the pension or just unfair delays.

I'm surprised to see you mention SERPS in there.

This subject only came about because of a bunch of dodgy claims companies needed a new area to work on as endowments were coming to an end and they looked at this before PPI. Most charged £500 up front and told a bunch of porkies to put in a template letter with virtually no chance of success. None of the decent claims companies touch contracting out now.

The FSA has a clear flowchart on that subject and its own research has found just 1.5% of people were potentially mis-sold. That is a tiny failure rate. That is just 120,000 people of the 8 million that contracted out. Also, not all of those 120,000 would be mis-sales as there were good reasons for some to contract out at an older age. They were just identified as potential mis-sales.

I know that the compliance teams that handle complaints automatically reject any complaint if the person was within the pivotal age at the time of contracting out. They varied from firm to firm but broadly fell around 40 for females and 45 for males when the majority of APP sales took place. This matches the guidance given by the FSA.

http://www.moneymadeclear.fsa.gov.uk/pdfs/s2p_wrongly_advised.pdf

Page 4 has the simple flowchart to show you if you were mis-sold or not.

If you wanted to pick a subject on pensions where there is potential for mis-sale, it ought to be sales of SIPPs or personal pensions (which are more expensive than stakeholder but not using external funds) since 6th April 2006 (A day). This is an area currently under FSA review. Bascially, a stakeholder pension should be recommended unless a SIPP or personal pension can be justified as being better. This could be use of more funds which are not available in stakeholder or features such as income drawdown (not available in stakeholder) or use of a really modern personal pension that is cheaper than stakeholder. However, too many people have been put in more expensive personal pensions but using stakeholder funds (in other words, they could have bought those funds in a stakeholder pension cheaper than the personal pension) or put in SIPPs when they dont have the knowledge or need for one (FSA rule RU64 covers this). Currently firms are being investigated and reviews are being carried out. I come across more of those in real life than people incorrectly contracted out.

But what do you do if you believe that the FOS has not conducted a thorough and fair assessment??

Your case is initially reviewed by an adjudicator. If you dont agree with the decision of the adjudicator (which either side has the right to) then the case can be referred to an ombudsman. The FOS generally follow what a court of law would. Indeed, it is often considered to be more favourable than a court of law as the FOS will disregard certain documents that a court wouldnt (key features document, illustration and cancellation rights for example). So, whilst you can go ot the courts to follow your complaint up after the FOS, you really need to seek legal advice because it could end up being a costly affair if you dont win.

Adjudicator decisons have been overturned (in favour of both sides).

I wanted to know how much of my monthly premiums was being taken in charges and ow my money was being invested. The Ombudsman told me that Phoenix did not have to reveal their charges this as it was commercial information!!!!!

Correct. Its not something within their remit to force a company to do and they have no reason to disclose it. The illustration of benefits gives you enough to work out what you need to know though.

Given that I was paying £52 a month into this policy for 25 years it beggars belief that a customer has no right to know where all the money is going and that the company point blank refuses to explain how their hard earned cash in being used.

Phoenix publish how the investments are managed.

Nor would Phoenix properly explain how my money was being invested when I was trying to work out why they were slashing annual bonuses three times a year and annual bonuses were also being slashed year on year.

They dont have to with anything more than the PPFM (assuming you are referring to their WP fund).

I ended up with less than ONE THIRD of what I was expecting and a lump sum of just £28,000.This has severely damaged al my financial planning for my retirement.

It shouldnt have much impact if you actually were planning as the shortfall potential was known a very long time ago. Whilst you are worse off with the endomwent, the other economic factors (many worked against endowments) should have made you better off.

I also doubt your figures. A £100,000 sum assured over 25 years at £52 would have needed around 13% p.a. and that doesnt take into account the cost of life assurance or charges and the fact you probably had tax relief on yours given the year it was likely to have been taken out. The figures dont appear at all realistic. Also £100k endowments in the 1980s were extremely rare as the average property price was in the £20k range.

The performance of my fund went into a nosedive under Phoenix yet they were allowed by the FOS to take over these so called Zombie funds only after giving assurances to the FOS about protecting funds AND looking after the interests of policy holders like myself

They took a nosedive because of increased solvency requirements and two major stockmarket crashes in quick succession and not having the resources to continue to pay big bonuses. If the old companies had continued, then there is a good chance that some of them would have failed. So, they have protected the funds. They just havent been able to do much with them.

Basically, what you are asking is unreasonable and not required. It doesnt take much to analyse where these things failed and why. I suspect from your wording that a number of the things you asked required advice authorisation and Phoenix dont have that so couldnt respond in the way you wanted even if they wanted to. If you wanted opinion and analysis and feedback on the quality and potential of their funds then they cannot give it. That falls under the remit of an IFA.

As a result of this I wont trust any financial adviser or bank worker selling policies ever again.

Better not go see any doctors. Harold Shipman was a muderer so that must mean all doctors with the way you look at things. Also, comparing a bank sales rep to a financial adviser is like like comparing someone working at McDonalds to a chef. Your policy wouldnt have even been sold by a financial adviser. What you do is up to you but try and be a little more balanced in your approach and you may actually get more success. Go off like a scud missile and you dont achieve anything.

Yes quite a typical and expected response from someone who makes a living selling policies and then when things go wrong uses spin and smoke and mirrors to explain things away.

I dont transact in the mortgage market so your accusation is wrong. I spend most of my time in analysis and research and people buy that from me. Your comments are more in line with a Daily Mail reader who doesnt want to know the reasons but prefers to whinge about it.

For the record yes there has been turbulence in the stock market ( hasnt here always been?) but since 2001 there has ben a dramatic resurgence which declined only recently.

That "dramatic resurgence" was great if you were in equities. Problem was that they were more or less forced by the FSA to sell at the lowest point and have little or nothing in equities until well after the bulk of the growth had already happened. Some started to increase their asset allocation in to equities just as the last years drop occured. The focus had moved from one of trying to be top or near the top of performance tables to one of protecting the solvency of the fund at all costs. They also had to pay for letting the marketing men set the bonus rate during the 80s and early 90s instead of the accountants.

Endowments were also priced on the assumption of a boom/bust economy with high inflation. Had that economic cycle carried on then virtually all, if not all endowments would have paid surpluses. However, it didnt and instead most people are better off because of it even though their endowments didnt pay out as much.

And whatever happened to the promised smoothing?

It still happens and it does work. Look at cautious managed funds or balanced managed funds (depending on the asset allocation of the fund in question) and you will typically see the with profits fund cuts through the middle of those zig zags.

I dont know about going of like a Scud but a financial adviser sold me a pup many years ago and how I wish I could track him down today to thank him in person.

You said yours has matured and it ran for 25 years. So, that puts it at the latest into the early 1980s. Financial advisers didnt exist back then. At least not at consumer level.

he disappeared long ago taking most of my first years Premiums with him for the dreadful policy he sold me.

Had this website existed back then, Martin would have an article on best buy endowments. Just as the consumers association did. The media were pro endowment as well. Hindsight is wonderful.

Doubtful.

Did anyone sign up to the Lenders being able to shift the "Interest differential" goalposts to ANY level the Lenders cared to dream up?
Yet such so-called "Implied" Conditions are claimed to be part of the Terms of my and many other Borrowers Mortgage Condition Offers.

Unlikely.

Such Terms, whether or not Express or Implied, are grotesquely loaded in favour of the Lenders and against the Borrowers and my own Legal Advice is that some Lenders are behaving in an unlawful manner by applying UNFAIR TERMS & CONDITIONS - whether Express or Implied.

100's of 1000's of us Borrowers are being CHEATED, yes CHEATED, out of several hundred pounds per month in Interest Rate reductions that are legitimately ours and ought to have been passed on months ago.

Ask yourselves.Would ANY Customer/ Borrower EVER, KNOWINGLY,sign up to ANY open ended Credit Agreement whereby they agreed to ANY VARIATION to the amount of Interest Charged ("differential" of Lender SVR to BoE or whatever) at ANY time during the life of any loan?

This is plainly absurd and these crafty Lenders are exploiting an ambiguity in the wording of the Terms of their Mortgage Loan Offers whereby at the time they alluded to Interest Rate changes - following the expiration of the“fixed” rate interest period of loan. They usually clearly state the then difference between Interest Rates set by BoE rates and their own SVRs typically around 2%. (Not 6% or more)

These usurers are now trying to exploit that ambiguity by removing that same Interest fixing Criteria established when the Loans were set out which has been followed for years by themselves until only recently. In view of the unprecedented low BoE rates they now argue that the “Implied” Terms provide these Lenders with the right unto themselves to do what they like with these long established differentials and to hell with the Borrowers!!

For these Lenders to argue that, at the time 2 years ago they could foresee a possibility of BoE falling to near zero, would be a down right lie. It's hardly likely we would all be feeling the effects of the "credit crunch" if their little crystal balls had enabled them to see the financial tsunami heading our way back in those times.

So whether or not it was Express or Implied, if this is not an UNFAIR TRADING TERM & CONDITION, then I don’t know what is and the OFT should tackle it immediately.

The Lenders MUST be challenged in the Courts by the OFT. I firmly believe in British Justice and these Lenders WILL ultimately lose. They WILL have to refund unjust overpaid interest charges (just as the Banks have been obliged to do by the Courts?) and ………
….these same Lenders COULD also be SUED for COMPENSATION by all Borrowers who, through the fraudulent action of these usurious Lenders, may suffer undue expense and financial hardship and likely lose their homes.They were quick enough in the past to adjust their Lending rates precisely in line with BoE base rate changes so this situation is both UNFAIR and UNJUST.

I strongly advise ALL borrowers snared in this outrageous usury (for that is precisely what it amounts to) to discuss these issues with their solicitor or Citizens Advice Centre. They must write and complain to the OFT and the FSA about these blatantly one sided and grossly unfair Terms. Everyone must write to their MP and ask what they are going to do about it?


To do NOTHING is not an option because it exposes ALL Borrowers who have recently come off their “fix” or coming off mortgage "fixes”, in the future and onto SVR rates, to these extortionate interest rate charges – FOR EVER.


The only other way out of this financial cesspit, IF ONE WHERE TO ACCEPT THIS DAYLIGHT ROBBERY, will be sell one’s property - providing one is not in negative equity and in which case, God help you.


Does anybody seriously believe that when BoE rates go up again in a couple of years that these disgraceful Lenders will keep their rates on hold to "assist" their Borrowers.

THESE EXCESSIVE, UNAGREED TO ,UNFAIR,USURIOUS RATES WILL COST BORROWERS LITERALLY 10’s of £1000's OVER THE NEXT FEW YEARS IN INTEREST CHARGES