Serious Fraud Office & FSA: fraud concealment?

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  • Fairdo_2Fairdo_2 Forumite
    442 Posts
    Was not too keen to get involved in this discussion thread because it is more like walking on broken glass than eggshells.

    I am also not sure if I am missing the point here, but I think many people will feel pretty darn bitter about having shortfalls in their savings, set up to pay off the mortgage.

    It has been mentioned on this thread that people who took this advice were stupid or ignorant. I think I understand the context this is meant in.

    I accept that peope have been seriously defrauded in terms of misrepresentations made to them by so-called advisers.

    I too have 3 endowments in total, that were original designed to pay for my gradually increasing mortgages as I moved up the ladder.

    For my circumstances, as I have moved home 4 times in 8 years, due to increasing family, divorce proceedings (Mainly because of the hours I worked) and a reconcilliation, I feel that my Endowments have probably served me reasonably well. Even though I now no longer expect any of them to hit the target amount.

    My view had been to pay off my mortgage by the age of 45. With just over 9 years to go, I am fairly sure that will no longer happen. However, a lot of that is based on my individual circumstances changing much more dramatically than I had ever envisaged. Life Plans do change and to that end, I actually feel I have faired better by having my Endowments than by going on a Repayment mortgage.

    However, with the benefit of the knowledge I have now, I would never take another Endowment out and likewise would not suggest to anyone to rely on investments to pay for the roof over the head.

    My Endowments are in no way top quartile performing and I would now rather devote my energies into covering any shortfalls over the shortest afordable timescale, whilst still trying to enjoy a reasonable quality of life with my family.

    I have no issues with my adviser as I am he. And so, this was the reason for the problem with my extensive working hours! I am a Mortgage Adviser and have been a fully qualified Financial Planner in the past.

    I have never made a fantastic living and have regularly worked far more hours than any of my piers in different careers. I have not pulled a person out of a burning building (first career choice, but Asthma put paid to that one!), but I can still sleep at night because I honestly believe that I have been concienious enough to act with my clients in their best interests, to the best of my abilities.

    When I started advising, I was a 19 year old living with parents with savings in the bank, because I was not struggling to pay a high rent. Even at the time, I felt odd trying to talk to a 56 year old man about how to suppliment his retirement provision as he had done the mortgage and the protection and the bulk of the pension planning. How dare I?

    However, I had to start somewhere and I was only going to get more proficient with the more experience I gained and the more people I saw. I always made apologies for the fact that I did not necessarily know everything about everything and I still do 15 years later.

    Maybe that is why I never made a fantastic living and I still don't have the money to decide to work a 4 day week. However, I am fairly sure that is why people trust me and want to see me again.

    I have advised on Endowments and I am not going to sit in my Ivory Tower and say that every person I advised on an endowment are going to now tell me they knew exactly what they were getting into. I did not do many, but each one I provided was offered in good faith based on what they told me their attitude to risk was and what their future intentions were. As I have said before, I had 3 myself. If I did not fully believe in it being fit for the purpose, I would not have taken it myself, but I also would not have offered them to anyone, as I always put myself in my clients shoes. (I work on the basis that, if I had the same priorities and circumstances as them, what would I do?)

    Endowments were offered as an alternative to Repayment mortgages and were viewed very favourably at the time, even within the industry. I was trained to a certain degree in many aspects of Financial Services and a lot of it is learned through experience. I would say that if I revisited my earliest clients Today with the same scenario they had then, I might even have different ideas on the best course of action. I am sorry to say that, but it is an inevitable situation. We get better at what we do, the longer we do it. (In most circumstances).

    I felt that when I joined, I was in a conciencious environment and had the back up of more experienced people who were managing my performance, processes and compliance. That, I felt, was sufficient for me to be let loose on the public, as any mistakes would then be rectified if my inexperience were to lead to the wrong course of action.

    As time developed, I remember getting wiser to the fact that investment returns were diminishing and this was viewed as a cyclical thing, therefore, things in turn should get better again.

    However, I fully beleive that anyone I dealt with, was given the information to make an informed choice.

    The last few Endowments I offered were st on a projected return of far less than LAUTRO were projecting.

    LAUTRO (at the time the Financial Services regulatory body) were projecting 7.5% as a reasonable expected return (Although not governed to be minimum or maximum)

    At this point, I was able to sell a policy that allowed you to choose your level of investmet risk. The last one, who is still aclient of mine and she fully believes the endowment was still the best for her, was profected at 4.2% assumed return. (She is a Management Accountant by the way and far better educated than my humble self!) This policy allowed you to pay more money in to increase the likelihood of a better return.

    Where I am leading to is that, I personally have never gone about to deliberately defruad or misrepresent anyone for my own financial gain and I cannot see that, higher up within the industry, there could have been such a conspiracy that it seems this discussion thread has been implying.

    Forgive me if I am wrong on this and missing the point of the thread!

    I suppose, if mentioning ignorance on the clients behalf, I should then say, that at worst, many of the people in the industry who sold these type of policies in good faith, had an element of ignorance themselves. Ignorance to that fact that the investment returns would end up lower for such a sustained period.

    I worked on guidelines from a Governing body that was (believe it or not) set up to look after the interests of the public. And, as mentioned before, started to go beyond these guidelines when I started to feel that there was becoming a higher risk that the guidelines may not be sufficient. Possibly the delay in ammending the guidelines was that loops had to be jumped through to change a system effectively, but that is all I would accuse the industry in general for, that it was not so quick off the mark.

    There will be ignorance to what will happen in the future, as none of us have a crysal ball that works. The industry forecasters did not envisage the sustained reduction in yield, the Actuaries did not, the advisers did not and neither did the clients. No life company would have deliberately set about misleading the public, because this whole issue has also cost these companies a lot of money and the industry as a whole a lot of bad publicity.

    There were people out there who were cheated and 1 person cheated is too many in my opinion, but for those cheated, I personally feel your energies are better channelled into getting appropriate recourse for your own situation. Then, if you are community minded enough, you could set up a constructive helpdesk of sorts to assist others in a similar position to obtain their recourse. I would not discourage anyone helping those who deserve the assistance in righting true wrongs, but there is a system out there that is supposed to be doing just that. If many people out there feel this is not achieving this aim, then there may be a case to lobby, with good argument, for the system to be altered in such a way that it can be achieved.

    I know I a reasonable new comer to the contributions in this forum, but I do feel that I do try to help people here to the best of my ability.

    Sorry for the long winded personal history, but I just feel it is time to put this thread into context. I honestly feel that if a person has been personally cheated deliberately, there is a good case to get this rectified, but I don't feel this is as widespread as has been implied.

    Good luck in your own pursuit Garry, but I do not think so many people have been as harshly treated as you must have been.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • serpicoserpico Forumite
    169 Posts
    Fairdo, you indicate by your age that you would not have been in the business 20 or more years ago when Endowments were being vigourously thrust down the publics throat as the ultimate and best way to purchase a home.

    It must be acknowledged that many who advised the purchase of Endowments were motivated by greed and the astromical commissions that were being paid for selling them.

    I personally know one former businessman who had gone bankrupt who boasted of the astronomic income he was making selling these damn things, and he could never have made that kind of money in his former business around £60K P.A in 1986. That was an awful lot of money in those days.

    I could begin not pay myself that kind of money in those days days even running two successful businesses employing 27 people. Therefore there was a huge incentive to act without Due Diligence and care and to sell products that were totally unsuitable for the purpose for which they were intended to obtain the pecunary advantage of huge commissions.

    Everyone, from the top to the bottom of the industry was making a right old killing out of the job at the time.

    It does not necessarily mean that the industry set out and planned to systematically defraud their customers, but I don't think there can be much doubt that their was reckless and systematic negligence in respect of the duty of care in the pursuit of profit.

    I personally find the term 'mis-selling' adopted by the Ombudsman and the Industry to identify these criminal wrongdoings an insulting further act of misleading trickery adopted and designed to insult the intelligence of the victims and divert attention from what truly and factually happened.
  • Fairdo - please do not think you are walking on eggshells on my account :-)

    Having had tough arguements with lawyers - nothing anybody says can phase me.

    Fairdo> It has been mentioned on this thread that people who took this advice were stupid or ignorant. I think I understand the context this is meant in.

    Fact: everybody is ignorant - we all are ignorant of something - only a fool would say they know everything.

    Depite being world expert at "stating the blinking obvious" - I am first to admit ignorance of something ;-)

    I know enough to state that we have been defrauded.

    Fact: you are stupid to take peoples word for anything when it involves large amount of money, without proof that is - especially if they may not be able to have influence on outcome of what they promise.

    I was stupid to take the word of my building society - moronically taking past performance they had shown as proof.

    Fact: you are stupid if you think that Endowment Mortgage was "fit for purpose" of massive loan repayment.

    How will it repay massive loan after a market crash?

    Duh - please forgive the Americanism - it best fits.

    Fairdo> However, with the benefit of the knowledge I have now, I would never take another Endowment out and likewise would not suggest to anyone to rely on investments to pay for the roof over the head.

    Fairdo - this is knowledge you should have had - when you become a Financial Adviser.

    It certainly does not require retrospective knowledge or need the experience of going through it, to aquire this knowledge.

    Fairdo> Endowments were offered as an alternative to Repayment mortgages and were viewed very favourably at the time, even within the industry.

    This is the smokescreen used by Financial Services Industry - to avoid admitting they already had the knowledge that you aquired - that using a gamble to repay a massive loan (for the roof over your head) is totally different to gambling your spare cash on the stock market.

    You seem an honest person - I am quite certain that when you advised people to take out Endowment that you acted in ignorance.

    The same cannot be said for the Financial Services Industry.

    P.S. The Financial Ombudsman is aiding and abetting the cover-up of this scandal. Everybody has been harshly treated.
  • serpicoserpico Forumite
    169 Posts
    Garry.

    I would agree with everything you have posted on this forum subject until:-

    You said, > "every one has been harshly treated".

    If ever there was an understatement of the facts of this abominable corporate crime and the cover up and duplicity by the perpetrators that has followed to cover their backsides, that was it.
  • True, when I said, "Everybody has been harshly treated" - it was rather understated.

    After all, millions of people had been robbed by the Financial Services Industry - and have been left to pick up the pieces of the crime in their old age.

    If I may - in the same friendly manner as your comment:

    When you said, "It does not necessarily mean that the industry set out and planned to systematically defraud their customers, but I don't think there can be much doubt that their was reckless and systematic negligence in respect of the duty of care in the pursuit of profit."

    Serpico - sorry I disagree.

    In the case of some ignorant single person IFA's - that had not asked simple questions of trainer - this may be true.

    The Financial Industry set out and planned to systematically defraud their customers - they did not know that Endowment would repay the mortgage loan - did they?

    What could the Financial Industry say in a Court of Law?

    "Well, we hoped it would repay these massive loans - the odds were good that it would. Errm.. sorry, given ever changing global markets and the possibilities for volatile movement there is really no way to calculate what the future odds will be, is there?"

    There is absolutely no way Financial Industry could say in a Court of Law, "Endowment is 'fit for purpose' of massive loan repayment" - we already had a repayment mortgage scheme - they defrauded us by selling a replacement product 'unfit for purpose'.

    However - I agree 100% with your statement:

    "I personally find the term 'mis-selling' adopted by the Ombudsman and the Industry to identify these criminal wrongdoings an insulting further act of misleading trickery adopted and designed to insult the intelligence of the victims and divert attention from what truly and factually happened."

    Spot on my friend.
  • serpicoserpico Forumite
    169 Posts
    Garry,

    I hold my hands up and on reflection I must agree with all you say.

    The motive of profit and greed was to great, the overwelming pressure to sell these Endowments. I.E £2000 commmission for selling an Endowment and £200 commission for selling a repayment mortgage plus the risk of your job if you did not sell enough Endowments is indisputable and resulted in the fact that 90% of mortgages being sold at the peak time were Endowments.

    Now we also have the further deceitful charade of the perpetrators involvement with and funding of the Ombudsmans compensation scheme. Purely designed to protect the industry and restrict the time limit and the amount that can be claimed in accordance with the criteria agreed between the ombudsman and his paymasters.

    This cleverly manipulated self regulation imposes draconian limits on the amount of compensation and the time in which  the victims of this crime can recover what they should be legally entitled to and is simply designed to protect the industries bulging coffers.

    The so called fines for example, Friends Provident £675,000 for mishandling complaints was merely a tiny tap on the wrist by comparision with the millions that they plundered from their victims. These miniamilistic penalties in my opinion are merely imposed to to impress the victims that the Ombudsman is doing a grand job on their behalf.

    When the fact is that:-

    Even the MP John Mcfaul has accused the FSA of not merely being "asleep on the job but comatose" over the issue of Endowment Mortgages.

    I find it interesting that never has any advisory body ever informed the victims that if they have a justifiable claim they have recourse through the Courts which will yield far greater compensation than the Ombudsman would award should the claim be proven to be truthful and honest.

    The simple fact is that if a victim was told for example that. "If you purchase this Endowment and religiously maintain the monthly payments until conclusion,  it will pay of your £25K mortgage and there will be a £3K bonus at the end", and the victim maintains those payments until completion, they must surely be entitled to receive the full £28K, it must be unlawful for either party to move the goal posts half way through what is a legally binding agreement and or contract.

    Did not millions buy these Endowments in the belief that they were being told the truth by the allegedly experts in the field of home purchase. Have all of these millions now conspired together to all make exactly the same allegation of the Endowment Providers criminal wrongdoing, I do not think so.

    What victims were told they would receive on completion is exactly what they should get, not a penny more, not a penny less, regardless of the effect on the Endowment providers huge profits, there Directors fat salaries and magnificent bonuses and personal pensions, or shareholders diminished returns.
  • theGrinchtheGrinch Forumite
    3.1K Posts
    Part of the Furniture 1,000 Posts
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    whether there is or isnt a case for fraud, it is an extremely accusation. I understand that you contacted a number of agencies, who all "failed" to reply. In all candour short of acknowledging your letter there is very little they could or would do unless they were willing to cosume time and money investigating.

    the onus is on you or to band together with likeminded people to hire a legal team and start constructing a case.
    "enough is a feast"...old Buddist proverb
  • theGrinch> whether there is or isnt a case for fraud, it is an extremely accusation.

    The accusations are not made lightly - or without documentary evidence that provides conclusive proof that the fraud came from management of building society.

    theGrinch> I understand that you contacted a number of agencies, who all "failed" to reply. In all candour short of acknowledging your letter there is very little they could or would do unless they were willing to cosume time and money investigating.

    You misunderstand - unless by "failed to reply" you mean pervert justice by refusing to answer.

    The facts are all readily available.

    A lot of time and money was spent on avoiding the question - including the official complaints found in my favour.

    They can hardly say the crime is too small to be investigated - can they?

    theGrinch> the onus is on you or to band together with likeminded people to hire a legal team and start constructing a case.

    The case does not need constructing - it is ready now.

    When you show a policeman that the bank is being robbed - you do not expect him to cover his eyes and pretend it is not happening - do you?

    You would believe the policeman was corrupt.

    Well - that is what the Serious Fraud Office and the Financial Services Authority are doing - covering their eyes.
  • serpicoserpico Forumite
    169 Posts
    Sorry Garry, got to disagree with you again.

    They are not covering their eyes they are just simply protecting the fat cats and their rotten corrupt organisations, because if they faced the truth and did their job properly it would bring the whole crooked industry crashing down around their ears and the prisons would be so full of suits they would all be sleeping on the floors.

    Get made redundant fall on hard times and can't pay your council tax and you take a holiday in the big house.

    Rip off £1000s of Millions from the ordinary hard working Joe and the government let you set up, finance and self regulate an agreed Ombudsman compensation system that pays out pennies in compensation. Then you walk away smelling of roses and quaff down the subsidised booze and lunches in the members bars in Westminster with your buddies.

    Pay a few hundred thousand in fines if you don't tow the line (Friends Provident £650,000) which comes out of shareholders dividends and then goes to the government, instead of the millions of victims and everything is hunkey dory because it looks good to the mugs who got suckered into one of, if not the biggest criminal scam in our countries history.

    Think I have asked this one before. How many politicians and government ministers are shareholders of and or hold directorships in these crooked outfits?
  • Serpico> They are not covering their eyes they are just simply protecting the fat cats and their rotten corrupt organisations, because if they faced the truth and did their job properly it would bring the whole crooked industry crashing down around their ears and the prisons would be so full of suits they would all be sleeping on the floors.

    Serpico - once again you forced me to agree with you.

    You will appreciate, I am sure, that my language is mollified - so as not to upset some on this board too much.

    I also agree that fines will not work - the fat cats will just take the money from their customers.

    Prison is the only solution (as deterent for others and as a punishment) should they be found guilty in a court of law.

    As to, "How many politicians and government ministers are shareholders of and or hold directorships in these crooked outfits?"

    I believe they are declared in book of members interests - I would imagine many MPs are paid to look after the Financial Industry.

    I also agree that the Finance Industry needs a complete re-evaluation of all their products, suitability, methodology etc.

    Our future depends upon it.
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