Act now on mis-sold endowments: new article

Dr_Mojo

I was sold an endowment in 1992 (Eagle Star through Halifax BS), I was informed that they "could" perform below expected projections but that this was very unlikely and I should expect a 30k profit above the amount required for the mortgage.

The amount I was told to expect above the mortgage payoff will not materialise and the endowment is underperforming and will not meet it's target.

Do I have a claim for mis-selling or is this one I put down to experience?

Thanks

John

dunstonh

Performance is not something you can complain about. Mis-selling comes down to whether you knew it was investment linked or not and you could get more or less.

Dr_Mojo

Fair enough. I'm now doing the math to see if I should cash it in now or continue paying until it comes to term.

Anyone any advice on this?

Thanks

John

awadan

My father took out an endowment mortgage in 1990. He says he was not given advice that the policy may not pay off the mortgage. Both this and a previous endowment mortgage would continue past his retirement age. In 1998 he retired 1 year early due to ill health and needed to reduce his mortgage in order to live within his means. In order to help him out, I bought the 1990 endowment policy off him. He used the money to reduce his mortgage debt. The policy ended in 2006, paying only slightly more than the original mortgage amount. Do you think my father has a claim for compensation? He has already complained about the earlier policy and recieved a couple of hundred quid from Abbey National. Should he have been sold a second policy that went into his retirement and does the fact that he sold the policy to pay off part of his mortgage make any difference? The first red letter I received from the company is dated March 2005

dunstonh

Do you think my father has a claim for compensation?

Not a chance. The policy matured hitting target and paying a surplus.

Should he have been sold a second policy that went into his retirement

There is nothing wrong with that providing it is documented at the time. Over the years, the post retirement thing has been abused by consumers and claims companies and this now isnt treated as a big issue as it once was. Now, you have to prove your retirement age. Retiring early wouldnt count.

does the fact that he sold the policy to pay off part of his mortgage make any difference?

Yes. It means it was no longer used against a mortgage and therefore any comparison that would take place against repayment mortgage would cease at that point. He has 3 years from that point to make a complaint if he feels it was bad advice.

The first red letter I received from the company is dated March 2005

So? its just another example of a shortfal warning on a projection being unreliable and understating the real position. Projections are just examples using example rates. The example rates may or may not be reflective of the real rates of return on the policy.

At the end of the day, the policy finished in surplus. So there is nothing to complain about as financially, it was the better option.

misinformed

Hope I have got this messaging right as I am new to this. I am very concerned regarding two endownments that we have. Having never dealt with our finances in the past when these were took out I now have to admit that I feel now that I acted very naively agreeing to these. I have become more aware of money matters as I have got older and of my other halfs lack of interest/knowledge of money, live for today being his motto. One of our endowments for 16,500 pounds is still alledgedly on track i.e green letter, well it was in Nov 2006. This was taken out in 1985.The other for 12,000 taken out in 1991is on an amber alert.I have been worrying about these for some time now since I have totally took over our finances. I have to say that I approached the insurers of the amber alert one putting in a claim and was only offered 300pounds. they claimed at the time of a possible shortfall of 600pounds. I ignored this as found it to be insulting on a 12000 pound mortgage of which we expected it to be paid plus bonus's. I was under the impression if I accepted their offer then I would not be able to apply for compensation again. I am toying with the idea of going to a financial advisor as I feel that following through the compensation route on here may be beyond my capabilities. I am getting better with money but not terribly confident at challenging people. Is there anyone out there who could advise or reassure me as to what I should do. 600pounds may not seem a lot to many people (and I suppose it could get bigger)but we are only low paid workers who will be retiring in a few years time when we thought our mortgage would have been paid and we would have earned a little nestegg. Silly us hey we should have had more sense they certainly saw us coming didnt they. The confident live for today guy with the naive trusting wife.All I want is what is rightfully ours, no knocking my partner please hes just an happy go lucky guy who got taken in by the selling patter. Only wish I knew then what know now I am certainly wary now of anyone selling anything and always look for the best deal.

dunstonh

I have to say that I approached the insurers of the amber alert one putting in a claim and was only offered 300pounds. they claimed at the time of a possible shortfall of 600pounds. I ignored this as found it to be insulting on a 12000 pound mortgage of which we expected it to be paid plus bonus's. I was under the impression if I accepted their offer then I would not be able to apply for compensation again.

If that was longer than 6 months ago, then you have probably lost your right for that £300.

I am toying with the idea of going to a financial advisor as I feel that following through the compensation route on here may be beyond my capabilities.

I think you should as you appear to misunderstand what financial redress means.

Is there anyone out there who could advise or reassure me as to what I should do. 600pounds may not seem a lot to many people (and I suppose it could get bigger)but we are only low paid workers who will be retiring in a few years time when we thought our mortgage would have been paid and we would have earned a little nestegg.

A £600 shortfall projection on a with profits plan probably means you will end up in surplus.

You have benefited over the years from lower monthly repayments (endowments are cheaper than repayment mortgages). You have one endowment that is on track for a surplus and the other which is only just off (on projections - which are not reliable). I think you have done alright.

Your best bet is to get the policies reviewed as a £600 shortfall and £300 redress payment suggests that endowment is not as bad as you think and probably heading for target.

jamesd

600 Pounds shortfall on 12,000 target is only 5% down and that's pretty good error margin when deciding how much to invest 16 years in the past. Worth remembering that your payments have been lower than for a repayment mortgage. As dunsonh implied there's a good chance that a terminal bonus and continued investment performance will mean that this policy meets its target.

You should ask them if their projections include the terminal bonus and what the history and projections of terminal bonus are. Also ask them if there's any mortgage promise or guarantee associated with the policy.

What is the interest rate on the mortgage, the monthly premium and the original mortgage term for the 12,000? I'll work out what the difference between repayment and interest only mortgage is so you will know how much you should be investing or saving to be no worse off than with a repayment mortgage.

dunnomate

I wish I had just a 12,000 mortgage !

Blue_grey

First time on this so here goes!

I made a claim about my endowment mortgage thanks to Matin's advice on two endowments which I panicked and converted the lot to repayment about three years ago. I have just received compensation on one for £1,119 on a 17k mortgage.However, I have had one rejected for being 'out of time' as I received a red letter from the Abbey in September 2003 telling me the shortfall would be £30,500. (on a 85k mortgage) and at the time I chose to take no action, Both motgages were sold in the same manner by the same company. I am in a dilemma! Should I take the money offered and run or should I complain further about my second mortgage?
Please help!