Endowment Misselling not attached to a mortgage

mayb_2 · 8 November 2006 at 1:46AM

Help and support needed! I have seen some posts that would imply that my husband and I are not the only people to have been missold an endowment policy (not attached to a mortgage) by the CIS. We are looking for others who have a similar experience to ourselves in the hope that we can bring some justice to those of us who have been sold these policies and are not covered by the guidelines laid down for Endowment Mortgage compensation.

We have been fighting the CIS for nearly two years through the Company, through the Ombudsman and through the FSA, over the misselling in 1994 of a Savings Plan with added life assurance - now called an Endowment Assurance by the company. We have been met by total resistance to our claims despite substantial evidence in our favour. Some of the quotes from the letters we have received are beyond belief. An IFA told us that this was an obvious case of misselling and we would never be allowed to succeed in our claim as it would result in too many similar claims being upheld - cash it in and put it down to experience - and would not charge us for this advice.

Has anyone out there received a projection from the CIS in the last year or two as to how their policies are performing, or recently been paid a sum far less than they were expecting - these were sold as with profits life assurances or savings plans with life assurance and later as endowment assurance? We had no information regarding our own policy until two years ago when we made enquiries after receiving a warning following a payout on another policy. Ours had a shortfall of around 20,000. In fifteen years we would make just over 1,000 on our premiums.

My husband and I took out this plan to replace a pension for me, that didn't look very promising and which I couldn't really afford. We were told that if we kept up the monthly payments for the full 15 years we would receive in the region of 30,000 (including a large terminal bonus) which we could use to purchase a pension. We had no warnings of risk - no paperwork to support this - no information over the 10 years we paid into this apart from one bonus certificate in 1998. We paid our premiums in cash/cheque to an agent of the company who visited us every couple of months and signed our payment book.

Without proof of the final payment promised we have had our claims rejected by the company and the Ombudsman. We are sure that if this endowment had been attached to a mortgage our claim would have been upheld based on the contents of the fact find, our attitude to risk and the lack of information given to us etc. We were more than shocked by the attitude of the Ombudsman who was partisan and disingenuous in the extreme when looking at the evidence from 'both' sides.

Our investigations showed that the CIS issued its PPFM in 2004/5 stating that these policies, and most of the others covered by their long term business fund were no longer open for new business. The FSA had not been given this information by the CIS in a clear breach of FSA rules. A complaint to the FSA and later a request for information under the Freedom of Information Act resulted in the promise to take our complaint seriously and then a 'covering' up of the original CIS web page and an attempt to obliterate it from all previous links. It is still out there if you know where to look, but over the past few weeks all obvious links have been replaced by a new document. Many weeks have passed and we are still awaiting a written reply to our request for information under the act, from the FSA - who do not obviously feel obliged to comply with the 20 day response time laid down for this within the Act.

We are determined to fight this and have been told that we would probably succeed if we took this to court. So, is there anyone out there with a similar experience or who has had a complaint upheld. Perhaps Martin could give us his thoughts on this one - please?

EdInvestor · 8 November 2006 at 9:03AM

In fifteen years we would make just over 1,000 on our premiums.

You don't appear to have made a loss.If there is no mortgage to repay, then there can't be a shortfall.Certainly WP policies have performed very poorly, but you can't claim on the basis of performance.

dunstonh · 8 November 2006 at 10:36AM

Without proof of the final payment promised we have had our claims rejected by the company and the Ombudsman. We are sure that if this endowment had been attached to a mortgage our claim would have been upheld based on the contents of the fact find, our attitude to risk and the lack of information given to us etc. We were more than shocked by the attitude of the Ombudsman who was partisan and disingenuous in the extreme when looking at the evidence from 'both' sides.

If it had been used for an interest only mortgage then the complaint would have been upheld. Not due to the reasons you say but because it is a savings endowment and not a mortgage endowment. A different type of endowment. A savings endowment has no shortfall issues.

A complaint to the FSA and later a request for information under the Freedom of Information Act

Which will usually result in a rejection as you have no right for information in this situation.

We are determined to fight this and have been told that we would probably succeed if we took this to court. So, is there anyone out there with a similar experience or who has had a complaint upheld. Perhaps Martin could give us his thoughts on this one - please?

On what grounds do you think you have a case? You are in a surplus position so are not financially worse off (as Ed says). The FOS, who tend to favour the consumer in areas of doubt, seem to think the documentation is sound. Given the year you started the plan, there is nothing wrong with the product. Yes, its naff and obsolete by todays standards but it wasnt in 1994.

If you went to court, you would actually see a greater weight put on certain documents which the FOS tends to ignore. The main one being the key features document which would have risk warnings on the very first page.

However, ignoring all that, what would you try and claim? You are in profit. Not a big profit but still in profit. You havent stated the premiums so we cant tell how it has done. You should also remember that monthly contribution plans take years to have any real value to see substantial returns as the money isnt all in there from day one.

Leon_W · 8 November 2006 at 10:52AM

You have also had the benefit of the life cover for the term aswell, this has to be paid for somehow. You do not say what the sum assured is, but if one of you were to die tomorrow you'll not be saying that it was missold.

I sometimes think that people compare endowments with straightforward savings plans or unit trusts and then deem them to be "underperforming" because the returns are lower. Of course they are lower. They also include the benefit of life cover.

Regards
Leon

EdInvestor · 8 November 2006 at 11:40AM

Of course they are lower. They also include the benefit of life cover.

True, but this is not normally a major reason for the lower returns.The lower (forecast) returns are caused by a combination of the big stockmarket fall of a few years ago, the switch to a safer investment mix mandated by the FSA, and the change to a low inflation, low interest rate economic environment, which will lower returns in the future.High charges are also a factor.The insurance cost is relatively small.

dunstonh · 8 November 2006 at 2:27PM

Savings endowments would have lower life cover than a mortgage endowment. Many as low as 1% of the value with no specific sum assured. However, the old home service insurance companies tended to issue versions with a small guaranteed sum assured with annual and final bonuses paid on top.

mayb_2 · 8 November 2006 at 3:46PM

Thanks for all of the responses - I cannot give all of the details here obviously as two years of correspondence etc would take up too much time. I can assure you that all of the issues you all raise have been addressed. I will attempt to answer a few of them here.
1. We were not sold an Endowment policy but a savings plan with the added bonus of life assurance. The word endowment does not appear on our documents and was never introduced until we made an official complaint.
2. Were were not purchasing life insurance as we already had this cover with our mortgage at the time - and still have this now.
3. We have lost the difference between what we were paid and what we were promised - therefore about £20,000. This was intended to purchase a pension so we have lost that too. This is obviously due to the performance of the stock market etc but we did not know that this would be the case, that there was any risk involved and we were never informed that this 'endowment' was not performing etc. We were assured at the point of sale that we may get more than this amount and no one was ever disappointed when they came knocking on their door with a cheque. The values we quoted were for the full term of the investment and including final bonuses - so about £1000 more than we had paid after taking all of that into account. We certainly didn't understand the finer points of endowments that you have been discussing amongst yourselves here.
4. We did not know we were investing in such things and we were not given any information on performance.
5. We have been told by someone qualified to judge and in receipt of all the facts that we would have a good case in law. -
6. I am not really looking for opinions on the validity of my complaint - believe me we have been there and done that with all of them, but responses from people similarly affected.
7. The documentation did not exist to prove the case one way or another and the lack of it was used by the FOS to favour the company. No key features documents dunstonh! However, there was a fact find, made at the time without our knowledge and not signed, and this showed our lack of financial accumen etc and confirmed that no illustrations etc had been given at the time. It was also proved that the new policy was taken out at the same time that we cancelled my pension. If we had had a video of the whole thing, believe me they would still have chosen to discount it as evidence of misselling.
8. We were not informed of the lack of performance of this plan and not informed that the fund concerned was closed by 2004. We would have continued paying into this not knowing that we were throwing our money away. It was an IFA who told us the best thing to do would be to cash this in as we were just throwing our money away. Didn't we have a right to take action sooner. Did the company have no ethical or legal demands on it to keep us informed?

9. The Freedom of Information Act requires that a person is given a response within 20 days - even if it only to tell them they are not entitled to a response. We were actually told by the FSA that we would receive a written response it just never appeared. Actually the FSA is subject to the Freedom of Information Act dunstonh and unfortunately, as you do not know what questions we asked it is not possible for you to know whether they were obliged to answer them or not. They appeared to think they were and they should know.

My whole point is that all financial sales of this kind should be covered by the same laws, otherwise it is possible for people to tell you anything they like to get you to part with your money with no repercussions - in any other world this would be called fraud! We are also talking 1994 here not 2004 - the information we all have now was not available to us then and we tended to take financial advice from those telling us they knew what was best for us! We can all be wise after the event.

toonfish · 8 November 2006 at 3:50PM

I may be being thick, but I can't see where the mis-sale occurs. You wanted a savings plan, which is exactly what you got.

dunstonh · 8 November 2006 at 4:19PM

1. We were not sold an Endowment policy but a savings plan with the added bonus of life assurance. The word endowment does not appear on our documents and was never introduced until we made an official complaint.

You were sold a savings endowment. What it is generically called doesnt make any difference. In 1994, most regular contribution investment plans were endowments.

2. Were were not purchasing life insurance as we already had this cover with our mortgage at the time - and still have this now.

And you werent sold life assurance. You were sold a product that had an element of life assurance within it.

3. We have lost the difference between what we were paid and what we were promised - therefore about £20,000. This was intended to purchase a pension so we have lost that too. This is obviously due to the performance of the stock market etc but we did not know that this would be the case, that there was any risk involved and we were never informed that this 'endowment' was not performing etc. We were assured at the point of sale that we may get more than this amount and no one was ever disappointed when they came knocking on their door with a cheque. The values we quoted were for the full term of the investment and including final bonuses - so about £1000 more than we had paid after taking all of that into account. We certainly didn't understand the finer points of endowments that you have been discussing amongst yourselves here.

Unless you have a written promise of a value, then you were not promised anything. You would have been given an illustration (probably twice - once by adviser and once in the post from CIS with the cancellation rights) which would have used three example growth rates and would have said that these figures are not guaranteed and you can get more or less.

4. We did not know we were investing in such things and we were not given any information on performance.

Hard to prove either way. However, did you really purchase a product without knowing anything about what you were purchasing?

5. We have been told by someone qualified to judge and in receipt of all the facts that we would have a good case in law. -

You mean they are in receipt of all your facts. There are four sides of every story. Your side, their side, what really happened and then how it is interpreted.

7. The documentation did not exist to prove the case one way or another and the lack of it was used by the FOS to favour the company. No key features documents dunstooth! However, there was a fact find, made at the time without our knowledge and not signed, and this showed our lack of financial accumen etc and confirmed that no illustrations etc had been given at the time. It was also proved that the new policy was taken out at the same time that we cancelled my pension. If we had had a video of the whole thing, believe me they would still have chosen to discount it as evidence of misselling.

The FOS will usually favour the consumer where there is insufficient documentation. The factfind you say was made without your knowledge is irrelevant. An experienced adviser can ask all the necessary questions without actually making any reference to a specific document. It's a data capture form. Thats all. The factfind would no doubt contain references to occupation and other facts. If these were completed, then it would be hard for you to argue that the questions were not asked. The fact you may not have seen the actual form is non issue.

Are you saying that CIS have confirmed to you that no illustration or key features document were issued? That would make it a rule breach and the FOS would certainly side with you on any other areas where things could not be proven. I would be surprised if the CIS would say such a thing. They may say the items cannot be located(?)

8. We were not informed of the lack of performance of this plan and not informed that the fund concerned was closed by 2004. We would have continued paying into this not knowing that we were throwing our money away. It was an IFA who told us the best thing to do would be to cash this in as we were just throwing our money away. Didn't we have a right to take action sooner. Did the company have no ethical or legal demands on it to keep us informed?

It is your responsibility to keep under review the products you have. If you had reviewed it earlier or got an IFA to look at it every few years, then it would have been picked up earlier. The CIS issue statements and its up to you to decide what you do with the information they supply. Unless you paid and had an agreement for ongoing servicing advice, you no grounds there.

9. The Freedom of Information Act requires that a person is given a response within 20 days - even if it only to tell them they are not entitled to a response. We were actually told by the FSA that we would receive a written response it just never appeared. Actually the FSA is subject to the Freedom of Information Act dunstonh and unfortunately, as you do not know what questions we asked it is not possible for you to know whether they were obliged to answer them or not. They appeared to think they were and they should know.

The freedom of information act doesnt apply in cases where you are digging for information to aid your complaint. This has been tested in court and on appeal to the high court and actually involved the FSA in the court case.

My whole point is that all financial sales of this kind should be covered by the same laws

You wont find many advisers that would disagree with you. The FOS is more likely to side with the consumer than a court of law and the advising company has limited right to appeal on the decision. Documents that a court of law would consider are often disregarded by the FOS.

We are also talking 1994 here not 2004 - the information we all have now was not available to us then and we tended to take financial advice from those telling us they knew what was best for us! We can all be wise after the event.

Very true which is why complaints are reviewed based on the rules and standards that were in place the year advice was given. It would be inappropriate to apply todays higher standards to things done in a different era.

Some of the things you mention would suggest it would result in an upheld response. However, you have made no reference to the suitability report (called reason why letter back then). That is the key document out of all things and contains a summary of what you are doing, why and what are the risk factors.

I just get the feeling, rightfully or wrongfully, that we are not getting the full facts here.

Like toonfish, I am not sure what your complaint is. Also, out of interest, what premium were you paying each month?

mayb_2 · 8 November 2006 at 6:01PM

As I have said it would be impossible to give you all of the facts of this case here and many others have already discussed all of the points raised.

The CIS have given us a copy of the fact find taken at the time etc and it clearly states that we were not given an illustration and the CIS have not claimed that we were given one. The CIS told the FOS (in writing) that this was not a legal requirement made of them at the time. They also failed to supply us or the FOS with copies of any documents relating to our particular plan although asked to do so. We received no illustrations or literature at the point of sale or through the post afterwards. We thought we knew what we had bought and were obviously happy with the idea that we had a savings plan with a return of £30,000 in 15 years. We were not sold an endowment and being told now that it was the same thing does not make it clear to us in 1994 so that argument in null and void.

Forgive me if I do not keep fighting the case through this thread. Yours is of necessity an opinion made without knowledge of the facts and is destined to remain so. How do we know what we are supposed to ask for - more particularly how did we know this in 1994? I think if you read some of the consultation documents and FSA guidance made available through their website you may find that they take a different view from your own and place a duty on financial companies to supply information in an accessible and easily understood format. Sometimes I think that the defensive attitude taken by financial advisors, whether or not guilty themselves of misselling, is a little unhelpful in developing a discussion on such issues as this. Your view and your aims will obviously be at odds with people such as myself.

You may be suprised to learn that I do not expect to get my money back at this stage. I would like to see such practices exposed for what they are and to warn others of the dangers to their future finances if they have similar investments and are not being given the type of information and warnings that they would have received for endowment mortgages. I would like to see this change and I would particularly like to see the FOS and the FSA take a stronger line when dealing with Financial institutions that break the rules.

The first line in the remit of the FSA states

market confidence: maintaining confidence in the financial system;

well that should give some food for thought.

dunstonh · 8 November 2006 at 6:59PM

Forgive me if I do not keep fighting the case through this thread. Yours is of necessity an opinion made without knowledge of the facts and is destined to remain so.

If you post on a forums, you are going to get opinions as answers.

Sometimes I think that the defensive attitude taken by financial advisors, whether or not guilty themselves of misselling, is a little unhelpful in developing a discussion on such issues as this. Your view and your aims will obviously be at odds with people such as myself.

I have absolutely no interest in taking sides and my posting history confirms that. I have told people to complain or take it further when I think they have been mis-sold. You see me pointing out a different opinion to yours as me being defensive. I see it as you having an opinion and not wanting to consider anyone elses.

The CIS complaints procedure said it not missold, the FOS deems it not missold. You have posted nothing here to suggest it was missold. Maybe its time to get the hint.

We were not sold an endowment and being told now that it was the same thing does not make it clear to us in 1994 so that argument in null and void.

Does it matter what it is called generically?

Forgive me if I do not keep fighting the case through this thread.

I dont expect you to reply based on that but you seem to be clinging on to things that really have no relevance to your claim. For example what endowment is called, your belief you have rights under freedom of information act or an opinion that you have a strong case in law. Its all opinions all the way through. Yours, the other person, mine and anyone else reading.

I think you need to look again at what did the reason why letter said. How did the FOS respond to your complaint? They give reasons for their objections to your complaint and you have the right to counter that. You can also appeal against the decision. You haven't said anything about what the FOS said. I see their refusal reason as being key to any of us here knowing why it was rejected.

If you were genuinely missold, then I wish you the best. Don't see the comments as being against you as they are constructive. There is little point me posting that I agree with you and how awful it is and trying to be your best forum buddy. That gets you nowhere. I post as I see it. Whether you like how I respond is up to you. Its certainly nothing personal and I would reply to any other thread you post in as if this one didnt exist.

Endowment Misselling not attached to a mortgage

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