Act now on mis-sold endowments: new article

pablo1827

dunstonh wrote: »

The Scottish law society rules are totally different to the FSA rules.

If it was an FSA regulated firm then you would almost certainly win by default as firms would have to show that the advice was good. No documentation works in favour of the consumer. However, with the Scottish Law Society I seem to recall that you have to show that it was sold incorrectly. Plus, even if you do get a result, their liability to pay out is tiny in comparison compared to FSA firms.

Thanks for the quick reply dunstonh,it seems very unfair that iam banned from taking this to FOS for judgement and instead have to rely on the law society to police their own members.There are an awful lot of endowments up here which where sold by lawyers acting on commision.

oldbear_2

April 1987 Scottish Life low cost endowment £75,100 to cover Interest only mortgage of same amount.
September 1991, re-mortgage and reduced amount to £45,000, endowment maintained at £75,100 level.
March 2006 - 2008, annual red letters from Scottish Life, shortfall estimate between £15,000 – £25, 000
September 2008, Nationwide agree misselling, but calculate zero compensation.
Calculation shows they use the reduced mortgage amount of £45,000 to calculate compensation

Looks like reducing the mortgage amount has reduced our claim to compensation for the £15-25K shortfall of the endowment.

Anyone else had this result.
Oldbear

dunstonh

oldbear wrote: »

April 1987 Scottish Life low cost endowment £75,100 to cover Interest only mortgage of same amount.
September 1991, re-mortgage and reduced amount to £45,000, endowment maintained at £75,100 level.
March 2006 - 2008, annual red letters from Scottish Life, shortfall estimate between £15,000 – £25, 000
September 2008, Nationwide agree misselling, but calculate zero compensation.
Calculation shows they use the reduced mortgage amount of £45,000 to calculate compensation

Looks like reducing the mortgage amount has reduced our claim to compensation for the £15-25K shortfall of the endowment.

Anyone else had this result.
Oldbear

Yes. It was increasingly common for redress payments to total zero in the recent years as the stockmarket recovered. The shortfall doesnt matter. Its the point of the claim or when the endowment ceased to used for the mortgage that mattered. Partial repayments could damage the claim as well. If you are not worse off at the point of the claim, using the surrender value, then there is no redress. It means that going with endowment actually made you better off so you arent entitled to anything.

Confused_Pete

webwiz wrote: »

A contrary view.
I find it hard to believe that anyone savvy enough to be interested in this site would really buy a low cost endowment believing that it guaranteed to pay off a mortgage. It was absolutely clear that the final payout amount was not specified at the start, so the blindingly obvious question that anybody with any senses would ask is "well what is the minimum?".

Confused_Pete

Remember that some of us took out our endowment policies at a time when they were a very new idea and generally most people had little knowledge about financial matters, particularly endowments and private pensions - you got your mortgaged based on the amount of money you had in the building society and the number of years you had been with them! When we first took out our endowment we were quoted growth rates of 12%, 14% and 16%. Nobody at that time would have envisaged the rates we are now quoted on our warning letters of 4%, 6% and 8%.

treliac

Confused_Pete wrote: »

Remember that some of us took out our endowment policies at a time when they were a very new idea and generally most people had little knowledge about financial matters, particularly endowments and private pensions - you got your mortgaged based on the amount of money you had in the building society and the number of years you had been with them! When we first took out our endowment we were quoted growth rates of 12%, 14% and 16%. Nobody at that time would have envisaged the rates we are now quoted on our warning letters of 4%, 6% and 8%.

Thanks Pete, and some of us have been saying just that. But it's banging your head against a brick wall to those who don't want to believe or who can't see how the rest of the world isn't as clever as they are.

Lordstrepsils

Hi

My wife was sold an endowment many years ago despite not, at that exact point, actually having a mortgage (although she got one shortly afterwards), nor it being for an amount that was subsequently sufficient to cover the mortgage she took out.

Unsurprisingly I don't believe she was told it might underperform, however she has since been advised of that by the supplier. The financial upshot that sold it has since gone out of business...

What do you think? Does she have a case for a claim?

Your views and help is appreciated.

Peter

dunstonh

Lordstrepsils wrote: »

Hi

My wife was sold an endowment many years ago despite not, at that exact point, actually having a mortgage (although she got one shortly afterwards), nor it being for an amount that was subsequently sufficient to cover the mortgage she took out.

Unsurprisingly I don't believe she was told it might underperform, however she has since been advised of that by the supplier. The financial upshot that sold it has since gone out of business...

What do you think? Does she have a case for a claim?

Your views and help is appreciated.

Peter

Pre-sale endowments used to be upheld every time on complaint. There has been backtracking on that now because it has been shown that in some circumstances it was good advice. Armed forces personnel for example.

around 2/3rds of endowments are now timebarred. So the first thing to do is find out if this policy is now timebarred.

If not, then when it was sold is important. If its before August 1988 then there is no protection in place and its end of the road. If it was after August 88 then you can put a complaint to the FSCS. That process is not quick with 12-24 months the usual timescale to be sorted.

You will also need to get your facts right as well. Putting in a complaint on the basis that you dont believe that your wife was told it could underperform isnt good enough. You werent there so what you believe doesnt matter. Its what your wife recalls that matters. Whenever a complaint is made dont trip yourself up by saying things that can be used against you.

Lordstrepsils

Thanks dunstonh - that's really helpful.

Do you know how I can find out if it has been time-barred or not? I read the article on this and Mr Lewis seemed to suggest that even if it was time-barred, it's still worth complaining...

It was definitely post-1988 and she isn't/wasn't in the armed forces.

My wife has details of the original sale, so any complaint would be in her name, not mine. I was just after a feeling from people as to whether or not we seemed to have a case as we know little or nothing about this.

Thanks again...

dunstonh

Do you know how I can find out if it has been time-barred or not? I read the article on this and Mr Lewis seemed to suggest that even if it was time-barred, it's still worth complaining...

Time bars are shown on the statement. You have three years from being first notified of a high risk of a shortfall. This has to be followed up with warnings at specific points to say when the time bar comes in. These usually also are on the statement. Failing that, a quick phone call to the insurer to ask if the policy is time barred will give you the answer.

As to whether to still complain, there is little point. Time bars are enforced by the FOS. Only unfair timebars can be challenged (a few companies didnt comply with the rules correctly and had to use a later date allowing some complaints to be revisted after being declined). So, there is the very remote chance you could get lucky there but it is remote and largely historical now as those that tried to use 2001 for example, went on to use 2003 or 2004 as the start point where the rules were followed. Meaning they timebarred last year mostly (last year was generally seen to be the end of endomwent complaints as a major issue with only small numbers coming in now.

It was definitely post-1988 and she isn't/wasn't in the armed forces.

Almost certainly a mis-sale on a technicality then. It doesnt mean she is worse off though as the default action on pre-sale endowments is for the policy to be voided. This then results in premiums being returned plus interest. That could be lower than the current value meaning no redress is paid (so check the plan).