Act now on mis-sold endowments: new article

turbobob

canny_scott wrote: »

Hi, we have an endowment policy which the financial ombudsman has ruled was mis-sold. Unfortunately the company involved have refused to pay us the compensation due. The ombudsman says we now have to take them to court. Has anyone done this? Any advice? We are in Scotland -not sure if the court system may differ from England. We're hoping with the ombudsman ruling in our favour we should win no problem -but are still a bit daunted by the whole idea.

Is that against a company that is no longer trading? I doubt the FSA would look kindly on an authorised firm refusing to comply with an Ombudsman ruling.

How much compensation is due?

dunstonh

The FOS cannot force a firm to pay. However, the FSA can (on the basis that if you dont pay you can lose your licence).

S_Mac

Please Help!!! I took a endowment plan out in 1998 with Zurich. Because of the publicised claims i decided to send Zurich a letter asking for compensation. They promptly replied and made me an offer. My question is do itake there offer? My endowment was to pay a mortgage for 59k. I took another morgage out in 2003 which was a repayment mortgage. I obvioulsy losy my faith in endowments. I have kept the zurich plan on for a "rainy day". There offer of compensation is based on the difference in value if i had taken a repayment mortgage out? How do i know there offer is reasonable? They also point out i can reject the offer if i changed my morgage for a repayment mortgage and they will look at the compensation again, which may be higher or LOWER! what should i do????

Thanks

Steve (Liverpool)

turbobob

Hi Steve. I am guessing from your post that they have calculated compensation based on standard assumptions, without taking into account you converting to a repayment mortgage.

I can't guarantee this is the case, but in my experience compensation usually turns out lower when there has been a conversion to repayment. Converting to a repayment mortgage is "mitigating your losses" - so you would expect it to reduce the compensation. In reality it depends on the surrender value at the calculation date (which can be backdated in conversion cases). Also there are different methods of calculation depending on whether you are deemed to have been aware of the risks of the endowment when you converted to repayment (mainly depends on whether you had received "Red" letters at that point). More info here http://www.financial-ombudsman.org.uk/publications/guidance/mtge_endowment_redress_cs.htm

So, my hunch is that you are probably best taking what they've offered, but I certainly can't say anything for definite!!

dismayed

We took out an endowment mortgate in 1984 and we informed it would not only cover the outstanding mortgage sum, but would have an excess of £19,000, which was quite a sum of money back then. A few years ago, we were advised that we could have a shortfall - worst case of £2000.00. We then made extra payments to the building society to reduce the mortgage by this sum. In recent years the bonuses that have been added to the policy have been pultry - equating to one months payment. As we were nearing the end of the 25 years, it seemed prudent (foolishly) to continue with the endowment in the hope that any final bonus would clear the debt.

In March of this year we checked with Phoenix and was assured that the sum would be covered with the final bonuses that were currently being paid.

Are we the lucky ones? 9 months to go on a 25 year mortgage and we have a credit crunch. Can someone give us any good news about what we can expect, if anything, when this policy matures next July?

Here's hoping

dunstonh

Are we the lucky ones?

Not really. Quite a lot of endowments finish in suprlus. Its the example illustrations whilst getting there that show shortfalls. You may have LAPR on your premiums as well which would have helped.

Can someone give us any good news about what we can expect, if anything, when this policy matures next July?

What is happening now isnt good for short term maturities but long term could be beneficial. What happens between now and April probably effects you. As we dont know what will happen its impossible to say.

graham47

dismayed wrote: »

We took out an endowment mortgate in 1984 and we informed it would not only cover the outstanding mortgage sum, but would have an excess of £19,000, which was quite a sum of money back then. A few years ago, we were advised that we could have a shortfall - worst case of £2000.00. We then made extra payments to the building society to reduce the mortgage by this sum. In recent years the bonuses that have been added to the policy have been pultry - equating to one months payment. As we were nearing the end of the 25 years, it seemed prudent (foolishly) to continue with the endowment in the hope that any final bonus would clear the debt.

In March of this year we checked with Phoenix and was assured that the sum would be covered with the final bonuses that were currently being paid.

Are we the lucky ones? 9 months to go on a 25 year mortgage and we have a credit crunch. Can someone give us any good news about what we can expect, if anything, when this policy matures next July?

Here's hoping

My endowment with Phoenix (ex. R & SA) matures in November.
Already ( in September) they are forecasting it will be £800 lower than the forecast they sent out earlier this year due to reductions in the forecast terminal bonus due to market conditions. Even this TB forecast is not guaranteed until they do the final calculation at maturity. Up until now this policy has maintained 'green letters' by a small amount. I always thought (naively) that the whole point was that, over the 20 years, the bonuses added 'smoothed out' market conditions !
My expectation now is that, come November, given the current state of the markets the terminal bonus will be severely reduced or even zero and this policy will suffer a serious shortfall.
By chance the new mortgage I took out 15 years ago was a repayment one but I was still hoping this would give me enough to pay of the majority of the remaining mortgage.
Guess I can only wait with fingers crossed !

scott22

I have been in contact with the financial ombudsman about this and was told that because my endowment was sold prior to 29th april 88 (march 88) by a independent financial advisor , that if this advisor has ceased trading that I cannot have any redress with the endowment provider (scottish mutual) ....so is that it ? do I now just curl up and accept the fact that I know have to takes steps myself to make up this shortfall ?
Anybody else in this situation and have had a positive outcome ie compensation ?

dunstonh

so is that it ? do I now just curl up and accept the fact that I know have to takes steps myself to make up this shortfall ?

Yep. Its game over for you.

irrelevant

We were sold a low-cost endowment with a mortgage from Friends Provident by an Abbey representative in Decemner 1989. We then added two further endowments within the next two years to cover an additional advance, and a larger mortgage when we then moved. One of these is a with-profits one.

They all have different end dates, differing by as much as ten years ....

We seperated in 1999, but it took until about 2006 to get the ancillary proceedings on the divorce finished, and until NOW to get the house sold and so to be able to dispose of the endowments. I had warnings during this period about shortfalls, but as the house was being sold, with plenty of equity to pay off the mortgage, I wasn't unduely worried. It wasn't until much later I found about about compensation for mis-selling, but as she totally refused to co-operate, I couldn't do anything.

I still have all the notes from the intial sales, including the projected returns and the advisors handwritten examples.

The question .. I realise there is issues about time-barring, but does this relate to the projections only, or have I still got some sort of claim because they were due to end at wildly different dates to the mortgage?

Thanks...