Act now on mis-sold endowments: new article

Scaredy_Cat_3

dunstonh wrote: »

They are not. Around one third of complaints result in redress and the majority of those are not because they were mis-sold but because documentation doesnt exist or isnt up to the required standard to justify the recommendation.


Nope. Nothing reasonable. On the upside though, most Scot Am policies hit target and pay a surplus and you have had lower monthly payments compared to a repayment mortgage. So, its not all bad.

I appreciate the advice, but I'm confused. You're saying people are getting compensation because there is no documentation to justify the recommendation of the policy? Well there's no documentation to justify it in my case - no-one seems to have records going back that far. All I could provide was the name of the Halifax adviser and the dates and location of the meeting. As far as I know Halifax provided absolutely nothing. All the onus was on me to prove I was not told there was a risk.

Secondly, I hope you're right about Scottish Amicable policies performing well - but I have received those warning letters saying mine is under-performing so I doubt it!

How have I had lower monthly payments compared to a repayment mortgage??? The whole point of going for interest only was that the Halifax adviser showed us print outs showing a repayment mortgage was only about £1 per month different from the cost of an interest only mortgage added to the cost of the endowment policy. She was saying you're paying virtually the same amount but with the endowment you get a bonus at the end. That's how she sold it to us. How did we benefit from lower payments?

dunstonh

You're saying people are getting compensation because there is no documentation to justify the recommendation of the policy?

Correct. Our network complaints team payout on around 250 of 1000 complaints. 25 are actual mis-sales. 225 are paid out because of missing files, missing documents or insufficient documentation to support the recommendation. The complaints procedure has a slight consumer bias in that that the firm has to prove it wasnt mis-sold rather than you prove it was. If the files are gone then there very hard for them to do it.

Well there's no documentation to justify it in my case - no-one seems to have records going back that far.

When data protection came in companies started destroying files over 6 years old thinking they were doing the right thing. With hindsight they were not and there was never any reason for them to do this but it left them without evidence to support their case. I remember back in my employed days destroying the files over 6 years old. I also remember the lack of care and consideration given to the files even before that. There was rarely any reason to ever go back and visit those files.

Had it not been for the poor treatment of client files and the general disregard for the paperwork then most claims companies probably wouldnt exist today and there would be no endowments compensation on the scale we saw it.

All I could provide was the name of the Halifax adviser and the dates and location of the meeting. As far as I know Halifax provided absolutely nothing. All the onus was on me to prove I was not told there was a risk.

Yours was pre-regulation so the rules were different back then. It would be like prosecuting smokers who used to smoke in pubs because of the rules in place now.

Secondly, I hope you're right about Scottish Amicable policies performing well - but I have received those warning letters saying mine is under-performing so I doubt it!

Here are the stats for Scot Am endowments.

2004 - 89% of endowments hit target (of those falling short, the average shortfall was £890)
2005 - 95% of endowments hit target (of those falling short, the average shortfall was just £49. The average surplus was £2409)
2006 - 96% hit target (average shortfall for those falling short was £700 and average surplus £2600).
2007 - 98% hit target (average shortfall for those falling short was £518 and average surplus was £3348).
2008 estimate - 98.2% expected to hit target with average suprlus of £2280 and those falling short, average shortfall will be £362

Example illustrations given with statements use example rates before charges. This can often understate the actual returns or overstate in the worst examples. Its all about future potential and Scot Am is not bad.

How have I had lower monthly payments compared to a repayment mortgage??? The whole point of going for interest only was that the Halifax adviser showed us print outs showing a repayment mortgage was only about £1 per month different from the cost of an interest only mortgage added to the cost of the endowment policy. She was saying you're paying virtually the same amount but with the endowment you get a bonus at the end. That's how she sold it to us. How did we benefit from lower payments?

During the MIRAS days you got extra relief then as your mortgage value wasnt going down. And typically the monthly payments swing over the years between being a little better and a little worse but on average around usually around 5% better off. The target growth rate used on the endowment and the charges will of course impact on that (was yours cheap or expensive for example).

Scaredy_Cat_3

Well, I appreciate the detailed answer but frankly, it doesn't make me feel any better! I still feel I was ripped off and it really gets to me when I see all this stuff about how you can get compensation if you were mis-sold a policy because we were clearly mis-sold the policy - the fact that there were no rules covering it is just a cop out.

I take your point about MIRAS, but at the end of the day we were looking at how much we would have to spend each month on the mortgage and the difference was a few pence either side of £1 so it doesn't feel like I had lower payments, and for that difference I would have opted for repayment if I had known about the risks.

As for Scottish Amicable, I do hope you're right because I have a file full of warning letters and I got a statement from them just a few days ago and honestly, it doesn't look good. Maybe in general they are doing well, but my statements suggest that mine isn't.

dunstonh

Well, I appreciate the detailed answer but frankly, it doesn't make me feel any better! I still feel I was ripped off and it really gets to me when I see all this stuff about how you can get compensation if you were mis-sold a policy because we were clearly mis-sold the policy - the fact that there were no rules covering it is just a cop out.

You cannot hold people liable for rules or laws that did not exist at the time. How would you like it if you did something that was lawful today but in 10-20 years time you got fined or put out of business because the rules changed after you did it?

Take the emotion out of it and think about the logic. You cannot prosecute on retrospective laws/rules. Often those laws/rules come about because of what happened before and a line is drawn in the sand as to when they come in.

As for Scottish Amicable, I do hope you're right because I have a file full of warning letters and I got a statement from them just a few days ago and honestly, it doesn't look good. Maybe in general they are doing well, but my statements suggest that mine isn't.

Yours could be one of the weaker ones but many endowments that go on to pay a surplus spend their time giving out shortfall illustrations. Mainly down to flaws in the illustration process which are fine with unit linked plans but dont work well with conventional with profits plans.

Scaredy_Cat_3

The other really annoying thing about the dates and rules is this:

We were sold the policy in February 1988.
The rules came into force in April 1988.
Our policy commenced in July 1988 AFTER the rules were in force.

I know what you are saying, but I can't help the way I feel. I feel utterly betrayed by the Halifax 'adviser'. I knew nothing about mortgages or endowments and I trusted her, it was her job to 'advise', and she failed to tell me there were risks.

treliac

Scaredy Cat

So sorry to hear of your situation and your obvious distress at not being able to call anyone to account.

I, too, am pursuing a mis-selling complaint. We weren't informed at all that this mortgage (as it was called) might not actually be able to pay for our home, forget any extra benefits. There's no way we would ever have taken it if we had even the slightest inkling. We might have just as well rented as that was effectively what we were doing with the pension mortgage we had. And from what I now know, ours was common experience. I don't believe that the vast numbers of people who bought these products, would have done had they known of the risks they were taking with their future security, even if they did make something of a monthly saving at the time. They have paid many more tens of thousands in monthly interest payments over their lifetimes through buying interest only mortgages rather than reducing balance repayment mortgages.

As far as I am aware, it it up to the company to prove that they sold the product correctly not up to you to produce written evidence of a warning that didn't exist. That's laughably a complete contradiction in terms.

Your account of the original sale is perfectly believable. It echoes so many others. What the 'experts' fail to consider is that the average person did not, certainly in the 80s, understand finances, had no access to information other that from their financial adviser, and fully believed in the so called professional advice they were given, by what were effectively salespeople who would earn big commissions by these disreputable sales methods. There are even posts on the board from product salespeople who say they weren't aware themselves of the risks and that their companies misled them too!

So, ignore the doubters and read some of the more supportive posts on the subject.

Why though do the FOS not want to know? Have you made an official complaint and how has this been presented - by you or by a claims handling company?

Scaredy_Cat_3

Thanks Treliac! I am upset about it - most of the time I don't think about it, but when I do it gets me so angry! We were just the same as you, no hint whatsoever that there was any risk.

There were two reasons my complaint was rejected. One was because of the date we were sold the policy - just a couple of months before the Act came into force (which is annoying since we didn't actually need the mortgage or policy until the house sale completed in August, so the policy didn't commence until July).

The other reason was that I couldn't find any paperwork to show an illustration the adviser had given us, proving that they had not told us of the risks. After all, it was 20 years ago. How do you prove a negative anyway? I agree it should be down to the Halifax to prove they did tell us, but in practice, it wasn't - it was all down to me and sadly I had very little paperwork left from 20 years ago.

dunstonh

How do you prove a negative anyway?

As its pre-regulation you dont get the same protection that post regulation cases get. You only have misrepresentation to go by (unlike those post regulation cases) and that is why they are asking you for evidence of that because that is the accusation you are making.

it should be down to the Halifax to prove they did tell us

Unfortunatly, people lie. It could be the sales rep, it could be you. So, if you make an accusation of a breach of law then you ought to have some evidence to back that up.

Why though do the FOS not want to know?

I took that comment to be that its pre-regulation and not sold by a Halifax employee but a local arrangement. so the FOS rejected it for being pre-regulation. Prior to the days of the societies having in house advisers, the local branches used to be able to refer to local firms and get a back hander for doing so. I dont know when Halifax moved it in house.

treliac

Scaredy_Cat wrote: »

Thanks Treliac! I am upset about it - most of the time I don't think about it, but when I do it gets me so angry! We were just the same as you, no hint whatsoever that there was any risk.

There were two reasons my complaint was rejected. One was because of the date we were sold the policy - just a couple of months before the Act came into force (which is annoying since we didn't actually need the mortgage or policy until the house sale completed in August, so the policy didn't commence until July).

The other reason was that I couldn't find any paperwork to show an illustration the adviser had given us, proving that they had not told us of the risks. After all, it was 20 years ago. How do you prove a negative anyway? I agree it should be down to the Halifax to prove they did tell us, but in practice, it wasn't - it was all down to me and sadly I had very little paperwork left from 20 years ago.

Again I can only empathise. It seems so wrong that some have been able to get redress payments and others have been prevented. Much of it has been arbitrary and dependent upon the policy of the individual company. Some customers have been lucky in that their product was sold by a company representative, others unlucky as they bought from an independent adviser. Time bars, that have been set to protect the financial sector - largely arbitrarily, as I believe, and at the expense of the individual. This is a scandal that has had a profound and lifelong effect on finances/quality of life for the people whose losses have been significant.

The whole debacle has been handled disgracefully IMO. Many of the past payouts should not have been made. Some of these policies have since recovered. The appropriate response should have been for policies to run to their natural conclusion and for shortfalls to have been made up at the end. Anything called a mortgage was clearly designed to be just that and to pay for the purchasers home. Anything less of an outcome was not fit for the purpose for which it was sold.

Scaredy_Cat_3

As far as I know, the person who sold us the policy was employed by the Halifax - she arranged our mortgage application with them, it was done within the Halifax branch, and she offered policies with a number of companies, not just Scottish Amicable.

And when you say people lie, it could be me or the sales rep... fair enough but in the absence of any proof either way, why should they automatically rule in Halifax's favour? Purely because of the date as far as I can tell.