Act now on mis-sold endowments: new article

dunstonh

I have checked with the Prudential who now hold these policies and they tell me that whilst I have a red warning on the second policy, nothing has been sent on the first as it was going to pay out a bonus so there was no need. I still think that I can make a claim but before I make myself look truly stupid with the people I am claiming from, I would like to ask for someone’s help & opinion here please.

Why do you want to complain? Your target was £27,455 and using the 4% figure (which is below what you are likely to get) you will have £32,400. Giving you a surplus

A 1982 policy is getting tax relief on the premiums (LAPR) and you would have benefited from maximum MIRAS tax relief on the mortgage whilst that was available. The endowment has saved you loads in interest and you have benefited from cheaper monthly costs as the LAPR on the endowment would have made an endowment mortage far cheaper than a repayment mortage.

You have absolutely no grounds for complaint. Indeed, if you think you do. I will pay you £27,455 and you can give me the endowment maturity instead.

Victors_Bruvver

Dear dunstonh - as you will probably gather, it has all foreign to me and all I was going on was this distant memory of being shown some illustrations with, what I called, mega bucks figures. Obviously I was wrong, so thanks.

It is interesting that you mention MIRAS, that was a blast from the past and was the only thing I understood about mortgages at the time. However, how and what does the LAPR you mention work?

dunstonh

Life policies, such as endowments used to get tax relief on the premiums, a bit like pensions do today. This was abolished in 1984. However, anyone that had a policy already running was able to keep their tax relief. So, this tax relief means that your endowment premium is lower than what it would have been without it. This made the endowment mortgage cheaper than a repayment mortgage by around a likely average of 15%.

As for returns, there has been a long term trend of lower percentage returns for the last 30 or so years. If you invested money 10 years ago in with profits, you would have just over doubled it. 10 years before that, you would have trippled it. 10 years before that you would have got 4x back. However, in real terms, i.e. the rate above the inflation rate, returns are not too much different to what they have always been. When you couple that to the fact your mortgage payments in recent times have been lower than ever before and your property value has gone up by more than ever before, you are better off than you would have been had the old boom/bust, high inflation economy continued. Yes, on that basis you would have got a mega bucks endowment payout but you would have been worse off overall.

tonyblack

Hi. I had my complaint recently upheld by HBOS on a policy sold back in 1989. The have made a calculation based on assumptions as I indicated. You have a choice to a- provide a complete mortgage history or b- allow them to use assumptions. My query is they calculated the redress upto 1997 based on a check box question "Is the policy still being used as a means to repay your mortgage/loan?" I checked NO assuming this related to the original Halifax loan and gave the details as "approx 1997. Reason - Change of lender to Abbey National. The Abbey mortage was interest only as we still had the policy and needed to keep payments low. I have contacted HBOS and they are sticking with original mortgage questionair calculation.

I have done some research on the net via the FSA site (very complicated) and the Ombudsmans site and found this link."http://www.financial-ombudsman.org.uk/publications/guidance/mtge_endowment_redress.htm"

I feel my case is that of example 2 and would like your opinion based on this example and the HBOS refusal to consider my case for calculating the redress upto 2004 i.e the date of the red letter. ??

loobs40

I have just used the Which template letter to write to the Yorkshire BS on behalf of my partner about misselling.

He was sold an low cost endowment with an new mortgage in 1986 on the basis that it would pay off his mortgage and he would get a lump sum. At least those are his recollections of it.

I looked at the policy on Sunday with him and he told me that the advisor said that the mortgage would be fully paid off by and the 'sum assured' of £8250 would be the bonus on top. I explained to him that wasn't the case.

To put my partners understanding of financial matters into some context, he is only one stage up from keeping his money under the mattress. He has no credit cards, he budgets his money every week putting aside small amounts to pay off bills and worse, most, if not all of his utility bills are in credit because he prefers to pay more whn he can rather than risk being in debt.

Since I met him a few years ago, I have persuaded him to open up a on line saver account since he was keeping all his money in a Barclays current account with practically no interest, but even that took some doing ! He is very much in awe of financial advisors and anyone in a suit basically, and when he took another mortgage out a couple of years ago, the advisor managed to sell him practically every extra going . Needless to say I cancelled all the unnecessary ones, and managed to get him cheaper home insurance etc saving him a fortune in the process

My misselling complaint is therefore primarily based on the fact that the advisor took no account of his attitude to risk and obviously did not explain the risks of a low cost endowment clearly enough. As my Partner said to me, if that advisor had explained it properly then there was no way on God's earth he would have taken it

I know that technically he was sold the policy before 1998, but does anyone know if the Yorkshire Building Society are one of those organisations that will investigate a complaint voluntarily ?

dreamylittledream

tonyblack wrote:

Hi. I had my complaint recently upheld by HBOS on a policy sold back in 1989. The have made a calculation based on assumptions as I indicated. You have a choice to a- provide a complete mortgage history or b- allow them to use assumptions. My query is they calculated the redress upto 1997 based on a check box question "Is the policy still being used as a means to repay your mortgage/loan?" I checked NO assuming this related to the original Halifax loan and gave the details as "approx 1997. Reason - Change of lender to Abbey National. The Abbey mortage was interest only as we still had the policy and needed to keep payments low. I have contacted HBOS and they are sticking with original mortgage questionair calculation.

I have done some research on the net via the FSA site (very complicated) and the Ombudsmans site and found this link."http://www.financial-ombudsman.org.uk/publications/guidance/mtge_endowment_redress.htm"

I feel my case is that of example 2 and would like your opinion based on this example and the HBOS refusal to consider my case for calculating the redress upto 2004 i.e the date of the red letter. ??

The short answer is yes you are being unfairly treated by HBOS.

I'd ring them back and ask to speak to a senior redress officer (I'd give you a name but that would break the DPA). Explain that you misunderstood the form and you are still using the policy. You may need to provide your latest mortgage to prove this. If they still refuse then tell them you will be taking your case to the FOS. This will cost them £350 just to have the case heard and as they have not followed guidance in your case they will lose.

If the endowment is still being used to a support a mortgage then the comparison calculation (known as an RU89 calc) should be run either to the present day or six months after you first recieved a red letter ' when you became 'aware of risk'. Most firms continue to run calculations to date (and HBOS as a current policy decision always do), although technically under the latest guidance (the link you have quoted) they no longer have to.

Generally speaking the longer the comparison calculation is run, the larger your redress will be. This is because the amount of capital repaid on a repayment mortgage increases as the term goes on. Therefore your offer is likely to increase following a recalculation. 'Capping' in 1997 is likely to have reduced the figure of compensation significantly.

dreamylittledream

loobs40 wrote:

I have just used the Which template letter to write to the Yorkshire BS on behalf of my partner about misselling.

He was sold an low cost endowment with an new mortgage in 1986 on the basis that it would pay off his mortgage and he would get a lump sum. At least those are his recollections of it.

I looked at the policy on Sunday with him and he told me that the advisor said that the mortgage would be fully paid off by and the 'sum assured' of £8250 would be the bonus on top. I explained to him that wasn't the case.

To put my partners understanding of financial matters into some context, he is only one stage up from keeping his money under the mattress. He has no credit cards, he budgets his money every week putting aside small amounts to pay off bills and worse, most, if not all of his utility bills are in credit because he prefers to pay more whn he can rather than risk being in debt.

Since I met him a few years ago, I have persuaded him to open up a on line saver account since he was keeping all his money in a Barclays current account with practically no interest, but even that took some doing ! He is very much in awe of financial advisors and anyone in a suit basically, and when he took another mortgage out a couple of years ago, the advisor managed to sell him practically every extra going . Needless to say I cancelled all the unnecessary ones, and managed to get him cheaper home insurance etc saving him a fortune in the process

My misselling complaint is therefore primarily based on the fact that the advisor took no account of his attitude to risk and obviously did not explain the risks of a low cost endowment clearly enough. As my Partner said to me, if that advisor had explained it properly then there was no way on God's earth he would have taken it

I know that technically he was sold the policy before 1998, but does anyone know if the Yorkshire Building Society are one of those organisations that will investigate a complaint voluntarily ?

YBS are in voluntary jurisdiction with the FOS, so they will investigate pre A day (pre April 88) claims and if they dismiss your claim you will be able to appeal to the FOS. Most pre 88 claims by firms in VJ are generally upheld as the frim is effectivley unable to defend them. In your letter stress the legal duty of care owed by the adviser to make your partner aware of the risk (attitude to risk is irrelevant before A day as it was not a requirement) and the Tiner principles (in particular the duty to explain the alternative of a repayment mortagge fairly and the need to make the consumer aware of the inherent risks within an endowment policy).

From the sound of it your partner has good grounds for compalint.

dreamylittledream

TOBRUK wrote:

The endowment company originally was the woolwich but changed to Barclays (I only noticed through receiving a statement) a few years later. So do I send it to Barclays or the woowich endowment company, as it was Woolwich I had it with originally? If that's the case, they wouldn't be the people who originally sold me the endowment! I don't understand, as I was sold the endowment in the woolwich building society - if I send a complaint to barclays, surely they can't take the blame for something woolwich building society adviser did?

All Woolwich Life endowment complaints are handled by Barclays now, as these products were only ever sold by in house advisers and Barlays now own Woolwich.

If you buy a company you also tend to buy the responsibility for the sales made by them over they years.

Ring Barclays and ask the endowment mis-selling department and see if they have your complaint.

dreamylittledream

Agoutyform wrote:

Hi from a newbie as of today.
To Martin and any other genius:
There seems to be no proper equivalent to FSA compensation if you bought a
mis-sold endowment policy in Scotland via a scottish solicitor in December
1988 (which is what my wife and I believe). I have been told that an English Parliament MP was going to raise this in the H O Parliament. I have not heard of any outcome and time is of the essence.
This area is apparently a 'reserved question' for the Scottish Parliament - which means they cannot deal with this matter in Scotland.
I thought I wrote one of my most persuasive letters ever about this only to find out
by phone from the FSA that the latter could not deal with it.
Do you know, please, if there is any news about what appears to be a great anomaly, on the horizon? There might be thousands in Scotland who are presently stuck on this. Obviously, I am slightly more interested in my own situation.
Kind regards

This is true, Scottish Solicitors were regulated by the Law Society of Scotland until 2001 when the FSA took over.

The Law Society of Scotland have no power to award compensation in line FSA/FOS guidance and as such there is no appeals process and nothing to prevent Scottish Solicitrs from rejecting all endowment complaints.

I would be very surprised if this situation ever changes as it would require retrospective legislation (which is highly unusual).

bjorn_toby_wilde

Fuming_Gal wrote:

Hi,
I took out an endowment with the Halifax in April 1988. I've made a claim but the Halifax say they did not sell me the policy. They claim it was an independent finance company that is no longer in business (a company I have never heard of). I bought the policy in a Halifax branch, from a lady wearing Halifax uniform and badge. The Halifax say that at that time they had independent financial advisers working in their branches and were under no obligation to tell me this. The FSCS can't look at my case because it was sold before August 1988. I now appear to have no comeback. Any suggestions?

Not sure you're right about not being able to complain to the FSA. I had 3 endowments via Abbey. complained about all 3 and they compensated me for the last one (sold post regulation) but not the other 2 (sold pre regulation), surprise, surprise!!

I complained to the ombudsman using the info and forms on the FSA website and they ruled in my favour and instructed the Abbey to compensate me on the first 2 as well. Just got a cheque yesterday.

Don't give up before trying the ombudsman - it's only one more letter.