Can he make Friends Prov give him cash ??

Somerset

My mate is standing looking over my shoulder here !!

He has a Friends Provident endowment policy. He complained it was missold. They agreed and offered compensation of £ 2,200. BUT they are insisting that the policy has to be surrended to get this compensation i.e. current surrender value 20k plus 2.2k compensation =22.2k payout.

Does he have to surrender the endowment ?? Why can't he have the 2k compensation paid out and retain the endowment policy ? They are insisting he can't. :eek:

dunstonh

Does he have to surrender the endowment ?? Why can't he have the 2k compensation paid out and retain the endowment policy ? They are insisting he can't

Thats normal for friends provident and I understand where they are coming from.

Their view is that if it was a mis-sale, then you shouldnt have had that product and you shouldn't keep it. If you choose to keep it then really, are doing it to try and make a profit. That indicates a risk based strategy you are willing to continue with and that probably means that you were willing to accept the risk all along but are just fed up that its gone down at this point.

silvercar

Their view is that if it was a mis-sale, then you shouldnt have had that product and you shouldn't keep it.

Fair enough and I understand the compensation is designed to put you in the same position as if you had taken a repayment mortgage at the time.

The endowment policies included life assurance that you would have taken out separately at the time. If you health has deteriated since then you won't be able to replicate the cover at the original price so you may have a need to retain the endowment policy.

dunstonh

I understand that too. However, IIRC, FP offer to put a life policy in place on original terms.

I dont know if you can persuade FP otherwise. Hopefully DOTW will be along soon and he should know as he would have far more experience on that front.

EdInvestor

Of course it may be sensible to surrender the endowment anyway.Post some figures so we can see.

Guaranteed sum assured
Declared bonuses
Monthly premium
Maturity date

defender_of_the_weak

FP standard stance is that the plan is unsuitble therefore you should not keep it and as they are offering guaranteed replacement life cover there are no obstacle to surrendering the policy.

In the very few instances where clients have wanted to keep the policy FP have requested specific reasoning for this decision and even placed some thinly veiled threats that 'if you want to keep it, surely this was suitable and ergo not mis-sold', leading to a potential withdrawal of the offer.

It is all down to circumstance, if your friend is no longer using the policy in connection with mortgage then maybe he can argue that as it is now a savings plan he could be in a position to take a risk with this as he is older, wiser and hopefuly wealthier.

Me. I can see where FP are coming from on this and warn anybody with an FP policy that this will be the outcome from the beginning, if you are lucky enough to get past the FP ruthless application of time bar rules (incorrectly IMHO).

Remember, the whole process of complaining is designed to put him back in the position he would have been if he received he right advice from outset, so if he take the offer and SV and pays a slab off his mortgage thats where he will be.

Somerset

dunstonh wrote:

I understand that too. However, IIRC, FP offer to put a life policy in place on original terms.

Thanks for all the replies. He's going to have a think !
Btw - what does IIRC stand for ?

Threepints

IIRC = If I Remember Correctly

Somerset

Details of endowment as follows :

Endowment premium £83.55 pm
Sum assured £65,000
Surrender value £21,400
Maturity date: Oct 2014
Min guaranteed cash sum (incl bonuses) £33,500
Declared bonuses :£10,900

Plus
What is the relevance of the “fund remains open but we no longer sell endowment policies” ????

What do you think ??