Act now on mis-sold endowments: new article

treliac

Thanks. It’s helpful to have the advice of people who are better informed on pension mortgages specifically. Especially as I guess they nearly all originated a long while ago since, as Dunstonh has said they were only sold “in a relatively short period.”

The point about the pension being drawn at retirement seems obvious but, certainly in our case, we took the pension policy for the sole purpose of repaying the mortgage and didn’t realise the full significance until recently. When we bought it, we were told that it would accumulate enough money for us to be able to pay our mortgage off early and that there would be some surplus to use in retirement. My thinking was that, once we had repaid the mortgage, we wouldn’t have been paying into it any more. It was a shock to realise that we had agreed to pay interest on the full loan for 36 years (on a mortgage loan that was arranged by the insurance company).

We were earning average salaries, have only ever paid tax at the basic rate and have never invested in anything other than, more recently, putting small amounts into a building society savings account.

mayb_2

treliac if it was a pension and the lump sum was to pay off your mortgage and give you a lump sum for retirement you may be in difficulties if you have no record of a promised return. These days you cannot take more than a certain amount of a pension in cash anyway as I understand it. Did you know you would be paying the mortgage for 36 years as I think there are some grounds for complaining based on the fact that the mortgage package would carry on beyond your retirement date? If this was 'attached' to the mortgage in some way you might have a stronger case (not that I don't think that you have a strong case but that wont necessarily wash with the ombudsman). Have you anything in writing to show that the mortgage provider accepted the pension as the basis for repayment of the capital? It is not required now as they assume you take responsibility for that, but I can remember we had to give our papers regarding an endowment to the new mortgage company for their approval, before they would lend us the money. The fact that they were both arranged by the insurance company might help as well they were sold to you at the same time and by the same person.

Am I right in thinking that you can take a case of a missold pension to the Ombudsman - or is this only related to cases where you have been persuaded to give up one pension in favour of another? Perhaps you were.

Its a minefield isn't it. At the end of the day you know you were missold this package no matter what and it should be enough to be a reason for you to be recompensed without having to jump through date hoops too.

Perhaps there is another raft of people out there who will all be finding out all at once that this has happened to them. This may result in the sort of pressure that was put on the government to sort out endowment mortgage failures. People without pensions and not being able to pay their mortgages either - nasty!! Have you thought of contacting your MP?

treliac

Thanks mayb for your reply. I don’t think ‘a promised return’ came into this, as I presume it does with an endowment. It was set up as a pension mortgage between the insurance company and the bank they arranged the loan through. The pension policy was called a Personal Retirement Plan and the document from the bank offering us mortgage facilities names the ‘source’ and ‘adviser’ as the insurance company and calls the ‘scheme’ a pension mortgage. As this was arranged between the two, we took it for granted that it would, as the ins. co. adviser told us, pay off the mortgage. The bank even specifies how much the minimum monthly pension contribution should be.

I believe there were suggested figures bandied about regarding how much the policy might make but we didn’t have a set figure in mind, beyond paying off our mortgage, and we accepted the recommendation that this would be the best way for us to do so.

We didn’t know that we couldn’t take 100% as a lump sum or that we would be paying out so much extra, over 36 years, in interest (however dozy that may sound!). Although we did learn that it would be unlikely to pay what we had been led to believe a few years ago and that’s why we converted to a repayment mortgage. A relative who had changed from an endowment opened our eyes to that. Nevertheless, we still didn’t know we might have a case for redress due to mis-sale.

We have already been told we can go to the Ombudsman and have done so, so things have started to move and the date that we took this mortgage has not hindered our action. (I have not referred to the companies by name, not feeling comfortable to do so as it’s all ‘live’ at the moment). We are looking to be put back into the position we should have been if we had taken a repayment mortgage, which we had before this one and have again now.

I do feel concerned for others with this type of mortgage because it hasn’t been given the publicity of endowments and there are probably people who still don’t realise what we now know. Take Lady-Jane, who’s just finding out. Dunstonh says there weren’t many of these sold, but perhaps we will see in time. We were/are ordinary people who were sold this by a salesman who was dead set to sell us only this product so I’m sure we were only one couple amongst many who were targeted by him and by others. I have heard that it was a very lucrative type of sale for advisers.

If we draw a blank with the FOS we will think about what to do next, but at the moment we are hopeful!

mayb_2

Sounds like you have everything covered treliac so I wish you all the best - at least things are moving now and if you don't get the result you want then ask to have it reviewed by the Ombudsman himself - it might not be different but it is worth a try. The waiting time is quite long though so don't worry too much if you don't get an answer for a while.

We had an endowment mortgage and won redress for that but unfortunately it did not make much of a dent in it. We also had what we had thought of as a pension plan but turned out to be an endowment - no redress and no pension. Although it had been accepted that we did not understand about our endowment mortgage and it was missold, the ombudsman would not accept that we didn't know what we were doing when we bought the 'pension' two years later. His thinking appeared to be that we had experience of endowments because we had the mortgage endowment - plus the company lied about other policies we had bought and when we pointed out that we didn't actually have any other such policies it was ignored. After all these companies don't lie do they!!!!! So two years after we had bought the mortgage we had become financial wizzkids and knew all about the stockmarket etc. Wonder why we aren't ritch wizzkids. That company was the CIS - do let us know which company you are dealing with when the time is right.

Have to say we know a lot more now - and were even aware of the sub prime market problems in America and Spain far earlier than Northern Rock!!! Could it be that we are still being ripped off by financial companies I wonder? Lets just sell a few more of these before everyone finds out what is happening - the commission is so good we can't stop now. Trouble is this one could lead to a real recession and nobody wants that, least of all the same institutions that created it. Integrity is what is missing these days. Now I am getting maudlin.

Retired_I.F.A.

I sold lots of pension linked mortgages, the first to myself back in the late 70's. Absolutely great they were/are IF The client fully understood them, and loads of what if scenarios were addressed.

kaznelson

Hi, Hope somebody can help me with this one.

After reading Martins advice, I dug out all my paper work and found my Red Warning Letter from Friends Provident. On the reverse of the letter it said that I must submit a claim before the 15th January 2008 or it will be too late?

I sent the standard first letter to Friends Provident, who referred me to the Accountant that sold me the policy. I wrote to them in December and didn't receive a reply. I sent another letter by recorded delivery on the 5th January 2008. I have spoken to the Post Office who said the item has been lost!!! Can I send another letter or am I too late now?

Mike_Twitty

Hi there. Was wondering if anyone has been subject to the same situation as myself. I enrolled on an endowment policy many years ago when I was in the Armed forces for then £50,000. When I started looking for a house the endowment wasn't going to be enough so I was advised to take out another on top, of which I did amounting to around another £50,000. Once I was in a position to but a house the endowments had gone down considerable and of my calculations then it wouldn't have been financially beneficial to use my endowment for mortgage purpose, so I decided to cash them in with the companies I had them with.
I think the original endowment was taken out with Sun Life, but can't remember the second.
Has anyone else been in this situation and where would I stand on a miss-selling basis.
As you can imagine I didn't get that much back when I surrendered the policies.

mayb_2

These are the things you are paying for when you send something by recorded delivery. If you search for Royal Mail on your computer and look for the Track option or Track and Trace depending on which screen you are in, you will be able to put the reference number from the slip you were given when posting this. If you have lost this there is a link to a page dealing with that too.

• Proof of posting
• Signature on delivery
• Online confirmation of delivery
• Up to £34 compensation
• Prices from 70p plus normal postage

You should send another recorded delivery letter saying what has happened (when you find out what happens when you track your letter) and include a copy of the letter you sent to Friends Provident and a copy of their reply to you. You raised this issue with the people who sent you the red letter before the cut off date they had given you. Best of luck with that.

If you can't find the Royal Mail link come back to me and I will put the link on here. Don't know why but my new Window's packaged computer will not allow me to open more than one explorer window at a time. This makes transfering info so much harder to do. Soon as you open a new one it shuts down the one you had. Sooooooooooooo annoying.

dunstonh

I sent the standard first letter to Friends Provident, who referred me to the Accountant that sold me the policy. I wrote to them in December and didn't receive a reply. I sent another letter by recorded delivery on the 5th January 2008. I have spoken to the Post Office who said the item has been lost!!! Can I send another letter or am I too late now?

Friends Provident have no liability for the advice you were given so you cannot complain to them. The accountant does. You need to make the complaint to them but they will use the FP time bar to reject. If you have evidence of posting the other letter you will be successful in overuling the time bar. Your evidence of initially claiming to FP (such as their response letter) will help your situation as well.

mayb_2

Retired IFA I am sure you are right. The problem is that most endowment mortgages were not sold by IFA's, but by salesmen with commission in their sights. How many people do you think would have any understanding about the stock market etc back in those days? People forget, and some of the very young working for the Ombudsman don't believe, that things were not always as they were today.

The Ombudsman 'rep' working on my case would not believe that we bought an 'endowment' (we didn't know it was that) from a person who knocked on our door. uninvited to sell us anything. That we paid our other insurance premiums to a chap from this company who would sit down and have a cup of tea and a chat with us - he came to us for years. We bought our endowment whilst I cooked dinner and made cups of tea. He just thought that concept was laughable - nobody would have bought something without a proper explanation and all the paperwork etc., according to him. That made us liars.

Not many average income people would have been buying stocks and shares and it was quite a complicated business - no high street banks doing this for you etc. We see wonderful news reports now where the reporter draws diagrams and carefully takes people through the reasons for the latest problems with the economy. These didn't exist and unless you could read and understand something like the Financial Times you wouldn't have a clue. Don't see many of our soldiers overseas doing that then or for that matter now. They have more important things to do. There are so many reasons why it is more likely that the average joe didn't have a clue - making people jump through hoops, is a pathetic attempt to make believe this only happened to a minority and to keep the cost to the financial companies down.

The time bar is ludicrous and would not be contemplated in any other field - but it comes from the Government backed FSA and Ombudsman service so what hope for ordinary folk with no money for legal fees.

These companies will lose out in the end because the well has run dry and nobody who has been badly dealt with is going to trust them again. That includes all of those people sold a mortgage they couldn't afford, on the advice that 5 or 7 times their income was affordable, because of the wonderful low starting rate they received. A tragedy for the stock market just waiting to happen. Sub prime selling was the death knell for Northern Rock and it won't end with them.

Ps I don't blame you for any of this Retired IFA and I am sure you are glad you have retired now - enjoy!