Act now on mis-sold endowments: new article

dunstonh

Dunstonh is still paying his

And it p's me off big time that I have to pay towards it as I have not had one single endowment (or pension review) complaint and I am personally financially liable for the advice I give yet I have to pay for those that are not.

.I only hope Dunstonh has the sense when he retires to cook his books and declare bankruptcy as thats the only way he can be guaranteed to leave his house to his family when he dies.

Actually, not so. A number of retired IFAs are refusing to pay the redress and there is actually no way to force them. I will finish my days abroad outside the reach of the FSA.

Its been quite interesting reading recently with a court ruling that an adviser shouldnt have to pay the FOS fees when a complaint is not upheld and retired advisers refusing to pay. Advisers are now being encouraged not to pay the fees until the appeal is heard. There seems to be some sense coming back and rebalancing the bias against advisers that has existed.

Retired_I.F.A.

mayb wrote: »

Well lucky old lucky old you!!!!!!!!!!! Like I said Retired IFA you would make a great Ombudsman!! In the eyes of the Ombudsmen that is.

Little chance of that job prospect, last time I spoke to an ombudsman I promised him a kick in the teeth if he ever came near me.

And i dont see myself as lucky regarding the lack of liability I have now. I paid for it by giving up a hefty chunk of my earnings to those IFA firms.

Retired_I.F.A.

Thats nice to hear Dunstonh, about time some IFA had the balls to take it to the courts. Justice does prevail eventually.

treliac

This discussion is descending into farce, so entrenched are we all in our beliefs about honesty and justice. Buying your home is the most important purchase of your life and can't be compared with buying a car or anything else that doesn't have the most grave consequences or implications that last a lifetime.

Many, many people who were advised to pay interest only on their mortgage and to take an endowment or equivalent in order to pay off the loan would have done so, just as we did, precisely because we were all told this was the most cost effective and sensible way of buying our home. Why on earth would we have taken the service of a financial advisor otherwise and having done this why would we then have decided not to go with his or her advice?

It was not, nor won't be today, normal for the average man in the street to understand the financial world. There was certainly not the access to information, internet etc, that exists now and that is why the recommendation of a professional advisor was accepted, probably after asking one or two questions which may not even have been the right questions now we are all so much wiser.

I didn't even look properly at the policies we were given when we took our mortgage. I didn't understand the way they were worded and, well we'd paid for professional advice so thought that was the reassurance we needed that all was well.

A mortgage is a product like any other and it should be fit for purpose. If not there should be a way for those who bought a dud product to receive fair compensation. Endowment/pension mortgage missale doesn't compare with those who borrowed many times too much and couldn't maintain payments. I have always understood how much I was borrowing and how much this would cost me year by year. Affordability was always clearly linked with income. We just weren't told that it may in fact not happen, just as we had been led to expect, at all.

It seems, from what I read on MSE, that the whole system of mortgage redress has been messed up. It would have been far more sensible and fair to have just waited to see which people were going to lose out for sure and for compensation to then be made to make up the difference.

I'm still nowhere near financially articulate to know where redress should come from in some of those scenarios highlighted by dunstonh but still do not believe we should just leave the poor b...ers to their plight. If the large wealthy companies are not culpable, then the government should provide some assistance. Obviously, no-one is going to want to break the small individual who was selling something he probably didn't fully understand anyway but that should not let the main product providers off the hook from selling a product that didn't do what it was explicitly sold to do or for setting cut-off dates so that large numbers of the losers are excluded from justice.

walmergreen

[FONT=Arial, sans-serif]Thank you all for discussing this subject, as I know that you will have covered the details of this issue many times before on this forum. I don't really want to personalise my comments, so I will (if I may?) address them to you all. When I purchased my original Endowment it was from an Insurance Broker. All the paperwork that he used, which I retain to this day, was created by the Guardian Royal Exchange. Indeed, I would surmise that if he did not adhere to their printed examples and literature, then he would not have been allowed to sell their products. My point is that the product was deficient and should not have been sold. Making individual IFA's responsible for their own actions is something that has happened since 1988, and I fully understand that they will conduct themselves professionally and not engage in the tactics used prior to regulation.[/FONT]


[FONT=Arial, sans-serif]Cars have been mentioned on a number of occasions and let me submit my own example. I build and sell you a car that is 'fit for the purpose that it was purchased for' (Consumer legislation 1975.) The vehicle then gets you involved in a serious accident and you sustain injury. If the vehicle is at fault, ie it was not your actions that caused your injury....but the vehicle, and the way that it was constructed.....then of course I am liable. I built the car to a standard that wasn't 'fit for the purpose that it was purchased for' and this vehicle then caused you an injury.[/FONT]


[FONT=Arial, sans-serif]In 1988, the Insurance Industry were using salesmen to sell their products and Insurance Brokers were competing with salesmen who were using some dubious methods to sell their wares. That is why I went to a respected Insurance Broker. I consider that he was using the current recommended methods to sell his wares also, and if he didn't then the Insurance Company would have not allowed him to sell their products. I and many others, have purchased a product that we reasonably expected to perform the function that we purchased it for. OK, things go up as well as down.....but I would indicate that the Insurance Industry employ very expert people to assess risk, and their own personnel must have been able to assess the substantial risk in these products. ie 'the product is not fit for the purpose for which it was purchased'. If they could not assess the risk correctly, then they should not have sold it. You just cannot use the 'things will go up as well as down' as an escape clause. How would you feel if I sold you a product and then told you at the point of sale, that it might not be able to perform the purpose for which you were buying it. You wouldn't buy it![/FONT]


[FONT=Arial, sans-serif]Enough! I agree, there is very little hope of any fairness in this, and whilst I understand that the issue circulates around whether you were mis-sold, I would hazard a guess that this is because it actually supports the short-term interests of the large companies involved. The product was not fit and it was sold in a way that disguised the fact that it wasn't very good. They must have known this because their own experts would have already told them, and they kept saying that 'things can go up as well as down'. OK, so you have just sold me a product that may not give me the outcome for which I purchased it. Now, why on earth would anyone want to spend 25 years buying something that may not give them what they originally thought? It is obvious that most people were hood-winked.[/FONT]


[FONT=Arial, sans-serif]The government got involved, and as usual they appointed a Regulator and called him an Ombudsman, who seems to spend most of his time supporting the interests of the Industry rather than the people who purchased in good faith. I would hazard a guess that this issue has done a great deal of damage to this Industry, and that there will be much spending on corporate promotion, and that it will take years to repair. Indeed we see the problems in this industry to this day. The NatWest Three pleaded guilty to diverting £7,000000. In the USA this is considered a crime punishable by imprisonment and that is where they are going. After much plea bargaining, and support from the UK Government, and also surprisingly the support of Liberty, they will serve a much reduced sentence. In a news interview after the case, an eminent lawyer who deals in these matters, declared that the UK is 30 years behind the USA in the Regulation of the Finance Industry.[/FONT]


[FONT=Arial, sans-serif]Northern Rock is just the latest example of poor business standards and a lack of financial responsibility. The CEO and his Board have ruined the Company and to alleviate the problems to those who were involved with this Bank, the Government has stepped in. Not to save the depositors, but to discourage a run on all UK Banks. Well! that's OK then. I wonder what penalty the former CEO will endure? especially as I believe that they paid themselves a bonus whilst the Bank was sailing off down the river. In this day of regulation, what about the people who are arranging mortgages knowing that their clients are paying too much, and that they will not have an insurance policy to back it up. ie we are busily creating our own sub-prime disaster. In my business we have a Corporate Risk Register and anyone can indicate what they think is a risk to the Organisation, and it's reputation. This not only includes any legal liability but any risk that could damage us. We then assess that risk and mitigate against it happening. Normal business practice, but Northern Rock actually followed a 'Business Model' that introduced risk via the USA sub-prime market. ie only thinking in the short term for profit, and not mitigating against risk ,using tried and tested business methods.[/FONT]


[FONT=Arial, sans-serif]Regards and Good Wishes[/FONT]
[FONT=Arial, sans-serif]Alex
[/FONT]

mayb_2

Thank you for that Alex. The subprime market problem was a long time surfacing here and had even visited Spain before arriving with Northern Rock. HSBC Bank was heavily inolved in America. It was only a matter of time before it arrived here and the banks would have been aware of it too. They didn't let that stop them before it had to. Instead they played a game of financial pass the parcel until in the end nobody knew who had the biggest booby prize. These people do not deserve to be bailed out by the government but are anyway. I also realise that this is as much to do with those who had their accounts and mortgages in that bank and would not have wanted them to suffer on account of the missdeeds of its owners.

There is no easy answer to the question of why the financial institutions are supported in a way that their customers are not. No doubt we would all pay a price if the banks collapsed like a pack of cards from their own acts of greed. However, if the government aren't prepared to see them go to the wall it should not be at the expense of truth, honesty and their customers.

You are right, as others have said - they should have taken the longer view and ensured that those who did have a problem at the end of their endowment term were cleared of the shortfall occuring at that time. This would have been a more honest, fair and simple answer. But no, we must keep up this pretense that only a few people have been affected by this and support the missguided opinion that this somehow is protecting the industry from lack of confidence. Quite the contrary as I am sure these institutions and hopefully the government will one day realise.

In the meantime dunstonh forgive me if I feel no sympathy for the troubles you think you have. You have profited and you are paying your insurance as all businesses have to. I don't think you have ever claimed to be suffering financially - you just resent having to pay a price for others missdeeds. Fair enough, I understand that - not sure why you think we should feel any differently about that though.

dunstonh

In the meantime dunstonh forgive me if I feel no sympathy for the troubles you think you have. You have profited and you are paying your insurance as all businesses have to. I don't think you have ever claimed to be suffering financially - you just resent having to pay a price for others missdeeds. Fair enough, I understand that - not sure why you think we should feel any differently about that though.

I'm not suffering at all. I run a highly profitable business. That doesnt mean that I should put up with things that are unfair. You need to realise that injustices work both ways.

mayb_2

I see, dunstonh - so that makes our injustices all right does it - and of course, if we must put up with things that are unfair why not you? You have just said that you run a highly profitable business - so that is after you pay these things that you object to so strongly. Can't quite see your problem here, but your take on life explains a lot about your attitude on this thread. You obviously have a lot of knowledge about finances in your own sphere of life - but I detect that you haven't a clue about the finances of people like me.

dunstonh

I see, dunstonh - so that makes our injustices all right does it - and of course, if we must put up with things that are unfair why not you?

I dont see why you believe that you should have a monopoly on things which are not fair.

You have just said that you run a highly profitable business - so that is after you pay these things that you object to so strongly. Can't quite see your problem here, but your take on life explains a lot about your attitude on this thread.

So just because I am successful, you are saying that that I shouldn't care?

You obviously have a lot of knowledge about finances in your own sphere of life - but I detect that you haven't a clue about the finances of people like me.

I dont know what level of finance you are at. Like most IFAs I deal with the medium and higher net worth end. I dont deal with low net worth clients.

walmergreen

Thanks for your comments. I have my answer, in that I should not count on anything actually changing for pre 1988 holders of Endowments. Let me say this......I have found the IFA's that I know, to be operating in a manner that is consistent with 'good practice'. I also do not point blame at my Insurance Broker who sold me the product in 1987. I do however, feel that the procedure that has been put in place, has perhaps been to the benefit of some who were not mis-sold, and others who were, are without any benefit.

I was glad to read the following:
"You need to realise that injustices work both ways" and I would agree that it is unfair to expect people who were not even in the market in 1988 to fund the compensation. My view is that the people who should be funding this are the organisations that created the products. I do not accept the principle that we are dealing in Shares, and what people were purchasing was a product to finance house ownership. If that means that we have a range of relatively less attractive products to do this, without the benefit of the ups in the market.....then according to the assessment of risk.....that is the way it should be.

Moving on, I do think that it is troubling that people put their faith in financial institutions and were let down, and now pay the price. However, I also notice that more than 300,000 people have viewed this discussion area, and Martin's website is really an asset to people who do not have an intricate knowledge of the world of finance. Equally, it also 'spreads the word' and let's be honest.......the finance industry has not exactly come out of this covered in glory, and I feel that it will take a long time to recover in the eyes of the public. Most youngsters I know, and I mean anyone under 40.......do not have a pension, and they need one! However, the perceived view is that 'pensions are rubbish, and you lose your hard earned money'. OK, we have a time bomb ticking.....some are investing in property, and in other income generating ways, but the vast majority will reach 65 without proper provision.....and a lot of that is the fault of the very Institutions who should be providing the products, but have unfortunately put their own profit before their reputations.

Thanks for your comments and helping me to correctly assess the situation.
Cheers
Alex
ps Having just read the latest post. I think that it is troubling that IFA's deal in Medium and High end customers. I can understand that it is market forces, but I would imagine that low end income potential customers are the majority of the population. I just wish they would teach finance, and how to get by....in the schools, but that's another subject.
Cheers
Alex