L&G redress offer - which option to take?

number9 · 19 April 2005 at 12:47AM

In response to my claim submitted to Legal & General, I have been offered sums to redress two policies taken out to cover my mortgage. Firstly, I have been offered amounts relating to cessation of the policies (option A). Secondly I have been offered amounts which assume that I continue the policies to maturity and refer to the redress had I been on a repayment basis mortgage from the outset (option

. I would welcome some advice about which option would appear to be most beneficial.

The figures are:

1990 borrowed £23000, L&G policy to mature 2015, Option A offer £9060,current surrender value £6751. Option B £2308

1992 additional borrowing £9300, maturity 2015, Option A £3418, current surr. val. £2402, Option B £1015

If there is any further info required to help clarify my question please lmk.

Help!

Many people think that the problem is submitting your claim. The most important thing is to make the right decision regarding the offer received. After some terrible dealings with Northern Rock over the years with different products - including having no life cover for my wife on the mortgage following our marriage - I am trying to get my finances on an even keel.

number9 · 19 April 2005 at 12:59AM

Missed an important point!

Should I use the amount received to reduce my mortgage balance (I will be switching to a new mortgage shortly on a repayment basis - 15yrs overdue) or is there another preferable method of investing the sum?

robnye · 19 April 2005 at 9:47AM

you can opt to keep the policies running with L&G ( i know i have two) and just take the compensation amount, but you will have to sign a form stating you would not complain again if the maturity values goes down even more.

you can take the full surrender value plus compensation

or change the policy to a paid up policy, which means you stop paying into the policy, you can take the compensation and then use the money you would have used for the policy payments to increase your mortgage payments...

number9 wrote:

Should I use the amount received to reduce my mortgage balance (I will be switching to a new mortgage shortly on a repayment basis - 15yrs overdue) or is there another preferable method of investing the sum?

simply put - yes

also when you renew your mortgage change some of it to repayment

i started with 50/50 split between repayment/endowment, each time i remortgage i increase the repayment portion.... currentyl 60/40

or change all of mortgage to repayment and just keep the endowment as a type of savings...

EdInvestor · 19 April 2005 at 11:03AM

Hello No 9

To work out whether you should keep the policies, please provide

-The value of the Guaranteed sum assured
-The value of the declared bonuses so far

-How much is your monthly premium(s)?
-What is the maturity date of the policies?

-Is there any temrinal bonus in either policy(unlikely)
-Wat was the level of the most recent annual bonus (%)

Then we can take a look.

Do you need the life cover?If you do, replace it before surrendering the policies if that is the eventual decision.

number9 · 19 April 2005 at 10:05PM

Editor,

I haven't received the 2004 statement yet. According to the L&G site they're due out any time soon and the bonus rates will be as per 2003.

Policy 1 £28.10 pmth
14/3/1990, maturity 14/3/2015
Basic sum assured £7038
Total existing bonuses £3321
2003 ann bonus £94
total of basic sum assured+ann bonuses to 31/12/2003 £10454
Guaranteed on death £23000
2003 ann bonus rates. sum assured 0.75%, existing bonus 1.25%
current final bonus rate 27%

Policy 2 £15.92 pmth
10/9/1992, maturity 10/9/2015
Basic sum assured £3786
Total existing bonuses £1207
2003 ann bonus £43
total of basic sum assured+ann bonuses to 31/12/2003 £5036
Guaranteed on death £9300
2003 ann bonus rates. sum assured 0.75%, existing bonus 1.25%
current final bonus rate 8%

hope this is ok...

foxyuk · 19 April 2005 at 11:47PM

i have 2 l & g policies..... what like are they to deal with????????

ps both with profits
£25000 - 1986,,,,,,,,,,,,,,£7000 1993

EdInvestor · 20 April 2005 at 12:42PM

Hi No 9,

These weren't up to much at all, were they, how depressing

Let's say you surrendered them both at the current S/V and put the proceeds in the back at 4.5% and paid in the premiums as well over the 10 years: you'd end up with 14,713 + 6147 = 20,860 total. Nearly a 13k shortfall. If you held onto them you'd probably end up with even less at the current rate of bonuses and a guaranteed value of c. 15k( and probably lose that 27% terminal bonus in policy 1 on the way) :mad:

The picture looks a bit better with the compensation added in

Invest the two policies, plus the compenstaion money and the premiums for the 10 years @4.5% and we get a bit closer to the outstanding amount with 26,023, but it's still a shortfall of around 6k.

I should take the S/V and the compo and run away from this lot as fast as possible.

Remortgaging sounds like an excellent idea as you're going to have to increase your payments however you look at it.If you need to, don't forget to replace the life cover before surrender.

You can see why the FSA decided to make an example of L&G over endowment misselling. This is a terrible performance from a top 4 life office.

dunstonh · 20 April 2005 at 4:28PM

You can see why the FSA decided to make an example of L&G over endowment misselling. This is a terrible performance from a top 4 life office.

You wouldnt really call it an example as the court case has highlighted failings in the FSA more than it highlighted problems with Legal & General

EdInvestor · 20 April 2005 at 7:40PM

Well I dunno DH, I called the result of FSA vs L&G a draw myself, but L&G has got some fairly, err, low performance examples of life and pensions in action IMHO;)

At the same time (without wishing to set Evan off again) the regulators weren't exactly on the case at the time.

Compensationitis · 20 April 2005 at 8:00PM

Did someone say regulators were on the case?

You must be joking Gov, their 'Enforcement Director' fell on his sword just before the results of the 'draw' were announced. His department had been accused of unprofessional behaviour, who by?

That bunch of bankers, yes I did say bankers, couldn't catch a pig in a poke.

L&G redress offer - which option to take?

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