Mis sold endowment? confused

sunshine124

Hi everyone,

I'll try to cut this short, my parents bought a house in 1981 with an endowment policy. They were told that when my dad would reach 65 the interest only mortgage would be paid off in full, hence my dad agreed to this and took out the interest only mortgage. however, when my dad reached 65 there was no sign of the mortgage being paid off. He therefore had to borrow money from relatives to pay off the mortgage. he originally bought the house for £13,000. So at 65 he was made to borrow money from relatives and pay off the mortgage. Both my parents were upset at the time but they couldn't complain to anyone because the place where they had took out the mortgage had closed down.

So here's the question, even though my dad has paid off the mortgage, does he have grounds to complain? I am not very familair with all this mortgage and endowment business, but was just wondering if anyone could help?

My dad is now 67 and it is still in the back of his mind as he was not told that he would have to pay the mortgage back in full.

many thanks for your replies.

turbobob

Hi.

sunshine124 wrote: »

Both my parents were upset at the time but they couldn't complain to anyone because the place where they had took out the mortgage had closed down.

This is the problem. So while they might feel they have grounds for complaint, there is no-one to complain to. That is assuming the same firm sold the mortgage and the endowment policy.

sunshine124

yes both the mortgage and the endowment policy were bought from the same place, but is it too late? Coz its been over 25 years since the policy was taken out.

turbobob

If it was sold directly by an insurance company sales rep, then the sales of policies that old may still be investigated. However, it may still be subject to being time barred. This would be dependent on whether warning letters informing your parents of a high risk of shortfall were sent before the policy matured.

If it was sold by another firm, a mortgage broker for example, then even if they were still in existence they would reject the complaint as it was sold prior to the Financial Services Act coming into force (29 April 1988).

As you have already said the policy was sold by a firm other than the insurance company, and that firm are no longer in business, then to me it sounds like that is the end of the matter.

dunstonh

Its strange that no policy existed. Back then the mortgage business would have paid a pittance and the real earnings were the policy. With it never starting they never got paid.

sunshine124

ok I have the last statement in front of me dated 2004.
It states:

Type of benefit: cash fund
age: 70
basic benefit £16990
Existing declared bonus £18250
2004 declaration £0

Type of benefit: Life

age:65
basic benefit: 16000
2004 declaration: non profit
special bonus £0

Ok can anyone tell me what all this means?

dunstonh

ahh, sorry. I thought you meant no policy was taken out. Is that policy still running or has it matured?

What the data indicates there is that the policy was worth £18250 at that point. That is more than the mortgage so the policy putting it in a surplus position. So, even if a complaint could be made, if that information is correct it wouldnt be worth complaining as the endowment has done its job. Your parents got LAPR tax relief on the contributions and it has exceeded its target. A good result.

However, you need to find out what has happened to that policy. Is it running to age 70 perhaps? (early surrender option may exist)

turbobob

sunshine124 wrote: »

ok I have the last statement in front of me dated 2004.
It states:

Type of benefit: cash fund
age: 70
basic benefit £16990
Existing declared bonus £18250
2004 declaration £0

Type of benefit: Life

age:65
basic benefit: 16000
2004 declaration: non profit
special bonus £0

Ok can anyone tell me what all this means?

Did they perhaps have two policies? One written to 65 and one to 70?

Its difficult to know what the information you've posted above really means without further details. In those days, non profit endowment policies existed - these would pay a fixed amount at maturity. But there are other "non profit" policies which purely provide life cover, for example.

In any case, it sounds like you haven't got the full picture there. Is one of the policies still running? What was paid out at age 65 if anything? It appears part of it is due to run to age 70??

EdInvestor

sunshine124 wrote: »

however, when my dad reached 65 there was no sign of the mortgage being paid off. He therefore had to borrow money from relatives to pay off the mortgage.

Did he contact the endowment provider to ask about this?Which company is the endowment provider? Have you spoken to them about these policies?

sunshine124

Hi guys

Thanks for all your replies, ok the policy is with Scottish Mutual and when my dad reached 65 they did not pay him out anything, he just gets a monthly sum for his life insurance, i think, which is a poart of his pension or something.
ok i do apologise as i am new to all this and my financial knowledge of things is very weak and that is why I was hoping that someone could just shed some light on this.
Anyway does that mean that my dad will get a lump sum when he is 70? And why didn't Scottish Mutual pay off his mortgage? As when my dad bought the mortgage, they told him that he must take out life insurance aswell.

this is all confusing and any replies would be highly appreciated.

Retired_I.F.A.

You obviously dont have all the documentation and have no idea where to start to find it let alone understand it (not your fault)and after 25 years what your fathers memory of it all may be totally wrong plus the options as to what to do with any money forthcoming are again totally different. Posting here bits and dabs wiythout knowing the full picture will only get you confused .So, make an appointment with a local IFA take what papers you have to him and let him sort it all out I say.