Should I accept endowment payout but add a caveat?
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Frances63
Posts: 265 Forumite
My mortgage endowment has matured and is very short of being able to pay off the amount it was intended to cover (never mind the profits expected!).
The endowment matured a year ago, but I was not informed as the endowment company claim they did not have my current address. (I was expecting it to mature in August this year). I have been at my current address since 2001 (i.e. 12 years).
I am making a claim against the mortgage lender for mis-selling as I had no idea the amount borrowed was at risk when I took out the endowment mortgage I was told that that much was guaranteed and that there would be 'profits' on top. If I had thought that there was any chance of a shortfall I would not have taken the endowment mortgage.
Additionally, I may come back to the endowment company with a claim as I believe they didn't try very hard to find me having claimed they haven't had my address for many years, they still managed to take £70 out of my bank account every month. My bank has my address as does the Mortgage company to which the endowment was linked. I may be entitled to a year's interest on almost £40,000.
My questions are:-
1) Is it ok to accept the maturity payment, but without prejudicing any future claim I may have against either the mortgage or endowment companies?
2) Should I add some kind of caveat to the 'maturity claim form' to that effect before signing it?
Any help much appreciated.
The endowment matured a year ago, but I was not informed as the endowment company claim they did not have my current address. (I was expecting it to mature in August this year). I have been at my current address since 2001 (i.e. 12 years).
I am making a claim against the mortgage lender for mis-selling as I had no idea the amount borrowed was at risk when I took out the endowment mortgage I was told that that much was guaranteed and that there would be 'profits' on top. If I had thought that there was any chance of a shortfall I would not have taken the endowment mortgage.
Additionally, I may come back to the endowment company with a claim as I believe they didn't try very hard to find me having claimed they haven't had my address for many years, they still managed to take £70 out of my bank account every month. My bank has my address as does the Mortgage company to which the endowment was linked. I may be entitled to a year's interest on almost £40,000.
My questions are:-
1) Is it ok to accept the maturity payment, but without prejudicing any future claim I may have against either the mortgage or endowment companies?
2) Should I add some kind of caveat to the 'maturity claim form' to that effect before signing it?
Any help much appreciated.
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Comments
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Anybody any ideas if I can do this? and if so how would I word it?0
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First question - when did you take out the endowment? If it was before April 1988 then I don't think any complain will get anywhere.0
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It was in 1987. I know this was before the FOS rules (1988) but I understand most companies will self-regulate claims before that date.0
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It was in 1987. I know this was before the FOS rules (1988) but I understand most companies will self-regulate claims before that date.
Only tied companies will consider pre-regulation complaints. If you bought via a broker, what is now an IFA, solicitor or accountant then they will not consider pre-regulation complaints.Additionally, I may come back to the endowment company with a claim as I believe they didn't try very hard to find me having claimed they haven't had my address for many years, they still managed to take £70 out of my bank account every month. My bank has my address as does the Mortgage company to which the endowment was linked. I may be entitled to a year's interest on almost £40,000.
You didnt try very hard to tell them your change of address either. Not once during the 12 years did you appear to wonder what your endowment was doing. Despite all the media coverage.
The fact that your are surprised that someone in 1987 set up 300 payments of £70 and they continued on that basis until maturity is not grounds for complaint. It has nothing to do with your address. The work on that was done in 1987.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Hello Dunstonh, thank you for your reply, here are my responses to your points:Only tied companies will consider pre-regulation complaints. If you bought via a broker, what is now an IFA, solicitor or accountant then they will not consider pre-regulation complaints.
It was a tied company. The rep was a rep of the mortgage company & tied to the endowment company.
I did tell them and everyone else my change of address. They claim they did not have my new address, however I received shares in the endowment company when it floated and continued to receive information on these at my new address, the mortgage company had & still have my new address, in fact everyone else except the endowment company who claim they didn't receive it. They could easily have obtained it. They told me they have been looking for me. Not very hard obviously.You didnt try very hard to tell them your change of address either..Not once during the 12 years did you appear to wonder what your endowment was doing. Despite all the media coverage. ..
I didn't miss not having communication. You take notice of what does arrive not what doesn't. I figured if there was a problem they would have contacted me. No news is good news.The fact that your are surprised that someone in 1987 set up 300 payments of £70 and they continued on that basis until maturity is not grounds for complaint. It has nothing to do with your address. The work on that was done in 1987.
I don't understand this. Why would I be surprised, I'm not. Just that they didn't try to find me on maturity. It would have been so easy. Ask the bank or mortgage company or shares department.
For my part I didn't know I was lost.0 -
It was a tied company. The rep was a rep of the mortgage company & tied to the endowment company.
So, all under the same brand then? The reason I am being cautious here is a lot of the building societies pre-regulation had yet to get into bed with one provider. They would use a local broker who would come into the building society office. most people thought it was the building society doing it but in reality it was not.I did tell them and everyone else my change of address. They claim they did not have my new address, however I received shares in the endowment company when it floated and continued to receive information on these at my new address, the mortgage company had & still have my new address, in fact everyone else except the endowment company who claim they didn't receive it. They could easily have obtained it. They told me they have been looking for me. Not very hard obviously.
If you have evidence to back that up then it improves your chances of them overruling the timebar. Most endowments are timebarred. The first bit you need to get past is the timebar.I don't understand this. Why would I be surprised, I'm not. Just that they didn't try to find me on maturity. It would have been so easy. Ask the bank or mortgage company or shares department.
The bank, mortgage company and shares department cannot pass info between the companies. It would breach the data protection act. You do tend to find insurers do go out of their way to find people. However, these things are typically paper based and slow and usually with endowments, the person gets in contact with the insurer. So, they may not have tried that hard expecting a phone call anytime.For my part I didn't know I was lost.
The problem is that they didnt know where you were to tell you that you didnt tell them your address. These sorts of things are never easy to resolve. I used to work in a bank. However, I was not allowed to read any of the screens or paperwork on the desk of the bank staff. Equally, i couldnt pass my information back to the bank staff. Despite having the same logo on the paperwork and working in the branch. It would breach data protection if we did. Crazy in most peoples eyes but just as one person would complain if you dont pass info on, another would complain that you breached the data protection act.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Hi
Firstly, the sale was pre A day (regulation) which means that the adviser had no duty to ensure suitability of the contact to your requirements, ATR or aspirations - however neither could they make any mis-leading statements (which actually comes under the Mis-representation Act 1967).
Firms have no legal or any regulatory requirement to investigate the suitability of ANY pre A Day sale (ie sold pre 29 April 1988) - however SOME (but not all) Firms voluntarily choose to investigate as a gesture of goodwill. (and I have investigated complaints for companies who took both sides of the fence on this).
You can not be compensated for loss of expectation (poor performance), which you have mentioned - however you also claim that the adviser provided a guarantee the policy would at least meet the target sum (mge amount), and had you been aware there where no such gte you would not have proceeded with the pch (indicating a risk adverse to cautious ATR). Was this alleged gte in writing or verbally inferred ?
You say the adviser worked for the mge lender, and acted as a company representative of the policy provider.
Now obv as none of us, or the investigator, was present at the sale, we have to largely go on available documentary evidence (which as per A day will be very little, if anything), your own recollection, your financial situation and ATR, and reasonable assumptions from standard sale's practices of the time.
To which it is known, that the illustration (quotation), would have clearly illustrated that the target sum was not guaranteed on maturity - further confirmed within the poicy documentation you subsequently recd upon effecting the policy.
Most low cost endowments are now timebarred, because from at least 2000 all firms have issued revised EMVs to low cost endowment policy holders, illustrating whether their policy remained on target to meet the target sum at maturity, based on prescribed illustration growth rates, or not. To which you had 3 yrs from the point of communication, warning that the policy may fall short of target, to register a complaint on suitability (not performance).
However, you say that you have recd no communication at all from the firm for over 12 yrs (ie since 2001 and your house move) - and I can only assume from this comment that you did not receive the revised EMV letters - so lets say on this basis, and notwithstanding its a pre A Day sale, the Firm voluntarily choose to investigate your complaint, which is why I am asking the following Q's.- Was the mge in 1987 your first mortgage ?
- You say 12 yrs ago you moved, did you increase your mortgage borrowing at that time?
- If so, was the increased borrowings effected on a repyment or interest only basis ?
- If repayment, why did you select this instead of interest only ?
- If interest only, did you effect a top up endowment policy ?
- If so, how did you pch the endowment, advised sale or execution only (no advice sought or received) ? And is any further low cost endowment policies, from the same or a different provider(s) to your 1987 policy ?
- The "endowment mis-selling scandal" has been high profile in the press for well over a decade .... and given your apparant risk adverse profile, may I ask why you chose not to contact the provider atl all during this period (given you hadn't heard from them), to establish whether your policy remained on schedule to meet the target amount or if you needed to take remedial action ?
Hope this helps
Holly0 -
Thank you again dunstonh, your information is helpful.So, all under the same brand then? The reason I am being cautious here is a lot of the building societies pre-regulation had yet to get into bed with one provider. They would use a local broker who would come into the building society office. most people thought it was the building society doing it but in reality it was not.
Yes, it was Abbey National/Friends Provident. I have read (on here I think) that the reps were Abbey National reps (I was in a banch having the discussion with her) and that they are also considered reps of Friends Provident. Therefore they will consider claims pre 1988.If you have evidence to back that up then it improves your chances of them overruling the timebar. Most endowments are timebarred. The first bit you need to get past is the timebar.
FP have sent a letter confirming that they had mail returned as 'gone away' from my old address. I also have paperwork from my move in 2001 confirming my new address. And evidence that my bank/building soc/shares etc all received their notification of my new address and used it from then on.The bank, mortgage company and shares department cannot pass info between the companies. It would breach the data protection act....
I talked to my bank about this. They said they wouldn't have given out my address even to someone who was receiving a monthly direct debit from me as you say because of data protection. However, they would willing have passed on a letter to me.0 -
Hi Holly hobby , thanks for your helpful and informative reply. I have answered your questions below.holly_hobby wrote: »Hi
Firstly, the sale was pre A day (regulation) which means that the adviser had no duty to ensure suitability of the contact to your requirements, ATR or aspirations - however neither could they make any mis-leading statements (which actually comes under the Mis-representation Act 1967).
Firms have no legal or any regulatory requirement to investigate the suitability of ANY pre A Day sale (ie sold pre 29 April 1988) - however SOME (but not all) Firms voluntarily choose to investigate as a gesture of goodwill. (and I have investigated complaints for companies who took both sides of the fence on this).
I have found some leaflets given to me at the time and nowhere does it state (not even in small print) that the 'target amount' was at risk. The term 'target' was not even used. It clearly states that the endowment "repays the amount borrowed at the end of the loan" additionally that you WILL have "Full life insurance cover throughout your mortgage" and "A tax-free lump sum at the end of the mortgage term" I was told only that part was variable, but was projected to be at least an extra £20,000. I was told the mortgage amount was guaranteed. I had no idea it would be gambled on stocks and shares. Even the extra was to be a share of the companies profits as in the description "with profits". Not a gamble on the markets.
Incidentally, I didn't need or want Life Insurance. I was 24 years old and single with no dependants. It came included with the deal so there was no choice to remove that part.holly_hobby wrote: »You can not be compensated for loss of expectation (poor performance), which you have mentioned - however you also claim that the adviser provided a guarantee the policy would at least meet the target sum (mge amount), and had you been aware there where no such gte you would not have proceeded with the pch (indicating a risk adverse to cautious ATR). Was this alleged gte in writing or verbally inferred ?
See above re the literature I received. I was verbally told that the amount of my mortgage was guaranteed to be paid off and the literature inferred the same. Even my application form says the sum assured is £50,000. That was initialled as 'ok' and dated by the rep. Now they are saying it is £17,200.holly_hobby wrote: »You say the adviser worked for the mge lender, and acted as a company representative of the policy provider.
Now obv as none of us, or the investigator, was present at the sale, we have to largely go on available documentary evidence (which as per A day will be very little, if anything), your own recollection, your financial situation and ATR, and reasonable assumptions from standard sale's practices of the time.
To which it is known, that the illustration (quotation), would have clearly illustrated that the target sum was not guaranteed on maturity - further confirmed within the poicy documentation you subsequently recd upon effecting the policy.
As above, the opposite is true, there is absolutely no mention that the 'target sum' as it is now being called was not guaranteed. The literature clearly says "Interest is paid to the Society and an endowment policy is taken out which repays the amount borrowed at the end of the loan".holly_hobby wrote: »Most low cost endowments are now timebarred, because from at least 2000 all firms have issued revised EMVs to low cost endowment policy holders, illustrating whether their policy remained on target to meet the target sum at maturity, based on prescribed illustration growth rates, or not. To which you had 3 yrs from the point of communication, warning that the policy may fall short of target, to register a complaint on suitability (not performance).
What is an EMV? I have worked out ATR (attitude to risk? - I didn't know there was any risk at all).holly_hobby wrote: »However, you say that you have recd no communication at all from the firm for over 12 yrs (ie since 2001 and your house move) - and I can only assume from this comment that you did not receive the revised EMV letters - so lets say on this basis, and notwithstanding its a pre A Day sale, the Firm voluntarily choose to investigate your complaint, which is why I am asking the following Q's.
That's correct- Was the mge in 1987 your first mortgage ? yes
- You say 12 yrs ago you moved, did you increase your mortgage borrowing at that time? yes
- If so, was the increased borrowings effected on a repyment or interest only basis ? Interest only
- If repayment, why did you select this instead of interest only ? n/a
- If interest only, did you effect a top up endowment policy ? No. I had kept this one going which would help to pay off the new larger mortgage along with some cash ISAs I have been saving up.
- If so, how did you pch the endowment, advised sale or execution only (no advice sought or received) ? And is any further low cost endowment policies, from the same or a different provider(s) to your 1987 policy ? Advised sale - no further endowment, the current one was largely relied upon.
- The "endowment mis-selling scandal" has been high profile in the press for well over a decade .... and given your apparant risk adverse profile, may I ask why you chose not to contact the provider atl all during this period (given you hadn't heard from them), to establish whether your policy remained on schedule to meet the target amount or if you needed to take remedial action ? I was not concerned about my policy as it was guaranteed to pay off my mortgage amount as far as I knew. I had no doubts or worries about it.
Hope this helps
Holly
My answers in red above.
Thank you for helping Holly. I'm really worried about this. I'm half way through my 'new' interest only mortgage and am relying on this money to patially pay that off in 2026 if not straight away.0 -
I have found some leaflets given to me at the time and nowhere does it state (not even in small print) that the 'target amount' was at risk. The term 'target' was not even used.
Target is another phrase for the mge amount - ie what the policy was designed to pay out IF performance met the assumed growth ratesIt clearly states that the endowment "repays the amount borrowed at the end of the loan"
DOES it ACTUALLY say this word for word, which is essentially a gte of the target sum, OR are your paraphrasing i.e it actually says "designed to repay", or something along these lines.
Are you sure it doesn't say "repays the amount borrowed on death during the term" ?additionally that you WILL have "Full life insurance cover throughout your mortgage"
yes this is the life assurance element, which is equal to the target sum (ie mge amount it was written alongside).and "A tax-free lump sum at the end of the mortgage term" I was told only that part was variable, but was projected to be at least an extra £20,000. I was told the mortgage amount was guaranteed.
You were told, or the literature states this ?I had no idea it would be gambled on stocks and shares. Even the extra was to be a share of the companies profits as in the description "with profits". Not a gamble on the markets.
with profits policies participate in the profits of the company, which are indirectly linked to asset backed funds - generally suitable to cautious risk profilesIncidentally, I didn't need or want Life Insurance. I was 24 years old and single with no dependants. It came included with the deal so there was no choice to remove that part.
The policy had intergrated life cover because this was a requirement under its qualifying status i.e the proceeds at maturity are paid without tax liabiilty.
Intergrated life cover on its own does not make the policy mis-sold.See above re the literature I received. I was verbally told that the amount of my mortgage was guaranteed to be paid off and the literature inferred the same. Even my application form says the sum assured is £50,000. That was initialled as 'ok' and dated by the rep. Now they are saying it is £17,200.
Now the story is changing a little .... inferred is not the same as you saying the literature states "repays the amount borrowed at the end of the loan" - which in essence is providing a gte return equal to the target sum.As above, the opposite is true, there is absolutely no mention that the 'target sum' as it is now being called was not guaranteed. The literature clearly says "Interest is paid to the Society and an endowment policy is taken out which repays the amount borrowed at the end of the loan".
Refer above.What is an EMV? I have worked out ATR (attitude to risk? - I didn't know there was any risk at all).
estimated maturity value
ATR - attitude to risk
So your extra borrowings were also interest only, but you didn't effect a top up policy, instead relying upon the existing one, and an additional payment in excess of the target amount (even though you admit you knew at least that part wasn't gted back in 1987) to meet the new total borrowings in 2001 ?
This suggest affordability issues - is that correct ? i.e a repayment mge was too expensive, and you elected to remain on IO without incurring additional costs of effecting a top up low cost endowment to support the additional debt.
Holly0
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