Act now on mis-sold endowments: new article

Lady-Jane_5

Oh Boy! I didn't realise what a can of worms this was going to open up!!!
There's so much to take in & my head is spinning. It's worse than taking out a policy in the first place!
Although it's great to know & hear from others going through the same problem, we feel very 'alone' on this.
We are still at the very beginning of complaining.
What do we do first? Write to Zurich who took over Allied Dunbar (whio sold us the policy) I presume? We have also changed our mortgage providers, & added to our mortgage since first taking out this plan.
Another fly in the ointment is that my husband 'froze' the plan in Feb 2001 as he joined a company pension when he changed jobs, 'cos you weren't allowed a personal pension whilest in a company pension scheme at that time! So that meant that the whole plan had to be frozen, not just the pension bit!!!
We were definately told that this plan would pay off our mortgage when my husband retires (on his 60th b'day); that there would be a lump sum left over to invest/spend; & there would be a decent pension. He has 7 years to go before he retires, & although we've looked at the policy during the years, we still assumed it would do what they said, but now it seems it was all speculation & assumptions.

Eeeeek where do we go from here? Any ideas anyone?

dunstonh

Another fly in the ointment is that my husband 'froze' the plan in Feb 2001 as he joined a company pension when he changed jobs, 'cos you weren't allowed a personal pension whilest in a company pension scheme at that time! So that meant that the whole plan had to be frozen, not just the pension bit!!!

The rules changed in 2001 and you were allowed to have personal and occupational schemes unless you had a final salary scheme and earned over £30k. However, you could get round that for a few years by nominating a basis year.

So, the choice to stop contributions could be held against you as it was a choice and not a requirement. Even under the old rules, the occ scheme could have taken its place or the contributions redirected to an alternative vehicle such as an ISA or switching part of the mortgage to repayment.

Changes of circumstances long after advice given cannot really be held against the adviser and decisions to do certain things (such as stopping payments) can work against you but there is really no hard and fast rule and each case would be looked at on merit.

Dunbar had an awful reputation and although pension mortgages are not common, they do often tend to be the provider that is linked to them more than any other. You would complain to Zurich.

Changing mortgage providers has no impact. Increased borrowing would have no impact on the basis that you would have a different repayment vehicle or done on repayment basis for that chunk. Stopping the premiums would have an impact and could work against you but its impossible to tell. If upheld, I would expect Zurich to only look until 2001 when calculating redress and not after that point. However, unlike endowments, there is no set in stone way of dealing with it.

treliac

Lady-Jane, I can only give you my suggestions. I am in a very different field of work to the financial world so stress that I am talking from a purely personal and inexperienced position.

I have done a lot of research into this to get a better understanding and to prepare for my own complaint. Although, this is far from having reached a conclusion.

What I would say to you is to prepare carefully. Take time (and it takes a lot of time and energy, which probably makes some people give up) to have a thorough look at all your paperwork and gain as much understanding as you can of the full extent of your situation.

When you do put your complaint in writing, think carefully about how it will read to someone else and try to keep it as concise as possible. Aim to include the full extent of why you feel your product was mis-sold, your reasons for acting as you did at the time, etc. Think carefully about what you were and were not told / what your understanding was, and be open where you are unsure of the answer. I’m sure some difficulty in memory is to be expected. For example we have been asked what were our general outgoings and expenses at the time. Could not possibly say with certainty, other than they would have been normal bills etc. for a couple. I was able to get my salary details from my employer. Some posts on the forum have suggested asking the company to check their original records for factual information they cannot recall.

When you get replies, bear in mind any time limits for a response that are set. You could use recorded delivery post to give greater peace of mind.

I think it’s important to give the full facts, as they relate individually to you (and this is where I believe claims companies are likely to fail). This is why we have put so much into preparing our complaint.

As I have said previously, we have had a lot of help from this site and other websites, including the Financial Ombudsman Service own site (look at Ombudsman News: May 2001 and Ombudsman News: Issue 56) and The Pensions Advisory Service. You will probably find, like us, that you will have to fill in various forms after you make your initial complaint, asking for much of the same information. Saving it on your computer could help you to copy and paste onto the forms.

From reading your posts, you would seem to have started a pension mortgage not unlike our own. Most information I have found relates to endowment mortgages and there are similarities to pension mortgages, but considerable differences too. Good luck with your complaint.

Again, a general article with information and advice would be well appreciated from Martin’s team, which might help us and might alert others still relying on pension mortgages they have never properly understood, but took out on the advice of the company’s salesman.

Lady-Jane_5

Sorry to be a pain, but I'm not sure where we stand on this.

Do any of the following facts give us grounds to complain for mis-selling?

We had a Repayment mortgage which we were advised to change to an Interest only mortgage & then take out a 'Personal Retirement Plan'. This was advised to us because when my husband reached the age of 60 it would a) Pay off our Interest only mortgage, with a lump sum left over to invest/spend; b) give my husband a pension; c) it included Life Assurance. (He also had 2 Growth Retirement plans which he was advised to 'freeze' to take out this new plan.) The Adviser told us that this plan would be used to pay off our mortgage, although when looking at the plan now, we don't think it mentions anything about paying off the mortgage - just a lump sum - and the whole reson why we bought this plan was that it would pay off our mortgage [which it doesn't look as though it will do at this present time, let alone in 6 or 7 years time when my husband reaches 60!]

The problem is, we are not just dealing with an edowment problem here - as there are several things to think about.
Firstly, the word 'mortgage' is nowhere to be found in the plan's paperwork - although we have a letter from the advisor stating:
"I enclose herewith two copies of our official quotation for the Personal Retirement Plan we arranged last Friday. The duplicate is for lodging with (mortgage lender) if they require it, as evidence that suitable arrangements have been made for repaying the £............(approx) outstanding, from the £........... tax free lump sum illustrated.
....... It merely remains for you both to see (mortgage lender) and do what is necessary to convert to the 'interest only' basis, and you will have arraged your mortgage in the most tax-efficient manner currently available!"

Also we have a newspaper article from our advisor, see post number 1201 in this thread. [Since that post we found out that the article was from The Observer Newspaper for around July 1987.]

secondly, there is the Pension part, & thirdly there is built in Life Assurance.

I wish everything was so simple, but of course it's not!

Any comments would be greatly appreciated.

mayb_2

I am no legal expert but I would have thought the paperwork you hold has everything you need to claim misselling. You were advised to stop doing something that would definately pay off your mortgage in favour of something that wouldn't neccessarily be able to do that. It is highly unlikely you would have taken that step if told this might not be possible. You have a letter stating that you have made suitable arrangements for paying off your mortgage too. I don't think many people had as much specific paperwork as you when bringing in their claims.

treliac

I agree with information already provided and suggest you might like to consider the following points as well.

The sale of your mortgage is likely to have been 'non compliant,' i.e. a mis-sale, if some or all the following apply -

• The financial adviser didn't explain that there might not be enough lump sum (currently 25% of the fund value) to pay off the mortgage loan.
• They didn't inform you properly of how a pension mortgage works, in a way you fully understood.
• They didn't give you information about all types of mortgage so that you could make an informed decision.
• They didn't gather sufficient information about your financial circumstances, plans and priorities before recommending this mortgage. You may not have qualified for a personal pension if you were already contributing to one.
• You were not told about how your savings would be invested and you would not have accepted this risk.
• You were not informed about the fees and charges that would be applied to your policy.
• You were advised to cancel another repayment vehicle for your mortgage (that may have been more suitable).
• You were advised to take the mortgage over an extended term, which involved you in having to pay interest on the whole of the mortgage loan for longer than should have been necessary.
• You were advised to take a policy that required you to pay into it beyond your anticipated date of retirement.

dunstonh

The only problem you may have is if its pre 29th April 1988 then its pre regulation. If the adviser isnt a tied rep of the insurer then you have no-one to complain to.

Lady-Jane_5

The adviser was from Allied Dunbar who have since been taken over by Zurich - so we will make our complaint to Zurich.

Thank you all for your help - this is such a great site.

dreamylittledream

Lady-Jane wrote: »

The adviser was from Allied Dunbar who have since been taken over by Zurich - so we will make our complaint to Zurich.

Thank you all for your help - this is such a great site.

AD only had their own tied sales force so Zurich will deal as they are in Voluntary Jurisdiction with the FOS.

The uphold rate on ex Allied Dunbar pension sold for mortgage repayment is pretty high (suitability is hard to justify on these products when sold to non financially sophisticated consumers). Add to this its Pre A and there is unlikely to be any sale file and I'd venture the chances of getting redress are fairly high...

dreamylittledream

treliac wrote: »

I agree with information already provided and suggest you might like to consider the following points as well.

The sale of your mortgage is likely to have been 'non compliant,' i.e. a mis-sale, if some or all the following apply -

• The financial adviser didn't explain that there might not be enough lump sum (currently 25% of the fund value) to pay off the mortgage loan.
• They didn't inform you properly of how a pension mortgage works, in a way you fully understood.
• They didn't give you information about all types of mortgage so that you could make an informed decision.
• They didn't gather sufficient information about your financial circumstances, plans and priorities before recommending this mortgage. You may not have qualified for a personal pension if you were already contributing to one.
• You were not told about how your savings would be invested and you would not have accepted this risk.
• You were not informed about the fees and charges that would be applied to your policy.
• You were advised to cancel another repayment vehicle for your mortgage (that may have been more suitable).
• You were advised to take the mortgage over an extended term, which involved you in having to pay interest on the whole of the mortgage loan for longer than should have been necessary.
• You were advised to take a policy that required you to pay into it beyond your anticipated date of retirement.

Most of these are generic to investment vehicles sold to support mortgages but its worth noting:

You were not informed about the fees and charges that would be applied to your policy.

This only applies to post 95 sales

You were advised to take a policy that required you to pay into it beyond your anticipated date of retirement.

Would be difficult to prove given a pension is normally set to have benefits drawn at retirement!

They didn't give you information about all types of mortgage so that you could make an informed decision.

This was not techncially an obligation until 2004 as mortgage advice was not regulated at this time. Its worth raising as an issue but the obligation was to recommend a suitable investment based on the client's circumstances, not discuss all the possible repayment options.

All the other points can only technically be raised to a post April 88 sale, as regulation did not exist prior to that point. On pre April 88 sale, you can only really fall back on the legal principle of misrepresentation.

That said the FOS do treat pre an post 'A day' cases in a similar fashion (based on an interpretation of suitability from personal circumstances), so providing the firm give you rights to appeal the case to the FOS, an impartial consideration based on suitability is pretty much certain.