Endowment compensation query

Debbie1

Another one here who saw Martin on TV saying "If you've got an endowment and haven't put in a compensation claim, why not?"

:eek: EEK! Thats Me!

I took out my £45,000 endowment with Scottish Widows in 1993. I took it out through a financial guy who the estate agent I bought my first house through arranged for me to see. Whether he worked independantly or for Scottish Widows I have no idea, though I don't recall being offered policies with anyone other than them. The two options I had were repayment with life assurance or endowment.

Prices quoted were similar for both and I chose the endowment as the projected figures showed a healthy lump sum at the end or the option of paying off my mortgage early- I seem to recall that I was told the plan should have grown enough for me to be able to do that by 18 years. Unfortunately, neither seem likely now and I don't have anything in writing to support either.
I was also advised that due to my being in the RAF at the time, an endowment would be suitable as it was 'portable' and would make it easier for me to move in the future.

Latest update from Scottish Widows (May last year) gave an 'Amber Alert' advising me that there was significant risk of shortfall, £13,073 and £6,973 at 4% and 6% respectively. At 8% there would be a potential surplus of £627. I have since changed part of my mortgage to repayment to allow for this.

Never really considered putting in a compensation claim before.

Is it something I should be doing?

Any advice appreciated.

dunstonh

Another one here who saw Martin on TV saying "If you've got an endowment and haven't put in a compensation claim, why not?"

If Martin really said that, then he has sunk to a really low level. Putting in an endowment complaint should be done if you were mis-sold. However, it shouldnt be done if it was sold correctly.

A complaint upheld is paid for by other consumers and out of the pocket of advisors, many of whom had nothing to do with the sale.

Never really considered putting in a compensation claim before.

Is it something I should be doing?

Do you believe that you were mis-sold? or are you just jumping on the compensation bandwaggon?

donnalove

how do you know if you were missold?

EdInvestor

Have a look at the Which site for misselling grounds;

www.endowmentaction.co.uk

Debbie1

dunstonh wrote:

If Martin really said that, then he has sunk to a really low level.

Do you believe that you were mis-sold? or are you just jumping on the compensation bandwaggon?

Yes he did say that.....or certainly words to that effect.

As for am I jumping on the compensation bandwagon......if I was, the letter would already be in the post!

Not sure where I stand (having read the info here and on which endowment action), but not convinced I was given the best advice....

which is why I'm after an honest opinion from someone with more financial knowledge than me

EdInvestor

Were you told there was a risk that the endowment might not pay off the mortgage?

vicpivo

I work for a large company dealing with Endowment Sales Complaints.

If I were you I would put a complaint in because:

a) Scottish Widows are/may be "Time Barring" complaints. Meaning that they will send you a letter and say you are only eligible to complaint in the next X months. After this, you are not entitled to complain. If you do decide in a few months to complain they may refuse to deal with it!

b) Large companies reserve compensation amounts in their accounts for potential compensation. Although very very indirectly this is coming out salesman/customers pockets, if you have been mis-sold you are entitled to it.

c) Companies are obliged by the FSA to take a holistic approach to dealing with the complaints. They should not be just looking at your specific complaint, but reviewing all circumstances around the sale to check it was sold correctly.

d) Companies should also take into account any verbal evidence you have - not just documented evidence. The fact you remember the salesman saying it would pay off in 18 years should be fairly strong evidence, and because as soon as you understood that their was a risk it wouldn't pay off you changed to a Repayment.

When drafting your letter, make it as personal as possible noting down all the information and discussions you remember. The Which? website is useful to use as a guide, but remember that Companies recieve 1000's of these types of letters a year and little regard is taken to the content because the format looks so similar.

Also whatever you do DO NOT USE ANY NO WIN / NO FEE type companies. They add nothing to the complaint, and then take huge cuts of any compensation.

Good luck!

Debbie1

EdInvestor wrote:

Were you told there was a risk that the endowment might not pay off the mortgage?

No.....I was told that at the projected rate 7% it would give me an additional lump sum or I would have the option once it reached the value assured I could cash it in to pay my mortgage off early (as above - think he said it would be about the 17/18 year point)

Debbie1

vicpivo wrote:

d) Companies should also take into account any verbal evidence you have - not just documented evidence. The fact you remember the salesman saying it would pay off in 18 years should be fairly strong evidence, and because as soon as you understood that their was a risk it wouldn't pay off you changed to a Repayment.

When drafting your letter, make it as personal as possible noting down all the information and discussions you remember. The Which? website is useful to use as a guide, but remember that Companies recieve 1000's of these types of letters a year and little regard is taken to the content because the format looks so similar.

Good luck!

Thank you - useful advice which I will bear in mind if I go ahead with a claim

dunstonh

b) Large companies reserve compensation amounts in their accounts for potential compensation. Although very very indirectly this is coming out salesman/customers pockets, if you have been mis-sold you are entitled to it.

Self employed/partner/director IFAs are financially responsible for the advice they give either directly or through their company. Any compensation upto the excess of their PI cover is paid out of their pocket. Excess of PI cover is usully around 2.5k to 10k per claim.

To make a claim because "you may as well" even if the case was sold correctly and within the rules is disgraceful and even fraudulent. If there is a valid case, then go for it.

No.....I was told that at the projected rate 7% it would give me an additional lump sum or I would have the option once it reached the value assured I could cash it in to pay my mortgage off early (as above - think he said it would be about the 17/18 year point)

Doesnt that mean that if 7% wasnt achieved you wouldn't have enough? You could slip up on that comment.

EdInvestor

No.....I was told that at the projected rate 7% it would give me an additional lump sum

...and at less than that, it wouldn't?

If there was no mention that it might be even less, failing to produce enough to pay off the mortgage, then I should complain, assuming that if you had known that was a possibility you would not have chosen the endowment, but rather gone for the safe repayment mortgage.