Act now on mis-sold endowments: new article

saintknoxmissus

Hi everyone
This is my first post and i'm a little unsure that i'm not just going to be laughed off the forum, i'm hoping someone will have an answer for me! Here goes!!

I have a number of policies which were taken out by my ex husband, one before our marriage and the others after. My ex took out the first one in 1984, the subsequent ones in 1988 (this one is in my name), 1991 and 1995 (this is a mortgage savings plan).
My ex always handled the endowment side of things as no matter how many times he tried to explain things to me i could never quite get my head around how they worked, even though i handled the money side of everything else.
The first endowment is due to mature next october with a substantial shortfall, i have the paperwork for each policy, and was aware from the bonus statements that there would be a shortfall on each. The question i would like to ask is, would the policies have been missold on the grounds that we did not actually have a mortgage until 2001? My ex was originally sold them as a type of savings plan and advised to keep it to himself that he had no mortgage! If this was the advice from the broker it makes me wonder if he was told everything he should have been, as he never once thought until the bonus notices came through that the policies would not pay out in full!
Thanks in advance

dunstonh

would the policies have been missold on the grounds that we did not actually have a mortgage until 2001?

Are they mortgage endowments or "savings" endowments? If mortgage endowments, the FOS have generally upheld pre-sale complaints unless the person was in the armed forces or had a need for a house to be provided for in future (whether alive or dead).

If savings endowments, then there is no mis-slale. Until the late 90s, endowments were the most common way for people to save.

mayb_2

Although I know from hard experience that a claim of misselling for an endowment not attached to a mortgage is hard to prove, it still remains a fact that. if you didn't fully understand what you had purchased and the risk involved of not even getting your money back, it is a mis-sale.

Because you cannot claim that it was worth a certain amount as you could when it was attached to a stated mortgage amount, these have been hard to pursue. That is another get out of jail free card that was handed to the finance industry by the Ombudsman and the FSA.

The only reason that mortgage endowment mis-selling claims have been addressed, is because there were going to be large numbers of people who were left in a position of being unable to pay their mortgages at the end of term. Most of those who received redress for this did not get any of the money they were often also promised, verbally at least, as over and above the mortgage itself. Many people were envisaging having this money as a support to their pensions. Not being able to prove the amount, these were treated as not having existed at all.

I am afraid that if it was a savings plan and taken out as such you may not have any paperwork stating what return you would get for your 'investment' and so will find it difficult to show that you were mislead. Because as was usually not explained at the time, these were investments not savings at all. As such they were subject to the fluctuations of whatever vehicle they were invested in. I don't think that the average saver would have been aware of that fact and probably would have put their money in the post office or building society instead if they had known.

I would search through the paperwork if I were you but if they were sold to your ex husband it may not be possible for you to make any sort of claim on his behalf. The one with your name on should have been discussed with, and sold to you. If you didn't understand it then it was missold but unless you have something that promises you a profit or an amount, in writing you probably would not get redress - this is the amount paid to bring you back to the position you would have been in if you had always had a repayment mortgage. It is not meant to be compensation so it cannot be applied without a mortgage which it was supposed to cover or written statement of a final payout.

Good luck with that anyway.

cldeaville

Just thought I'd let you know that after reading your website it prompted me to look in to making a complaint about my endowment mortgage.
I was a bit scared of going it alone so I looked up a company who do it for you, they sent me the forms which I filled in and sent back.
I now have just received an offer of £2100 (my mortgage was only £23,750)
It was so easy - one slight regret was that I have to pay the company 15% for their help (quite low percentage though - as some charge up to 40%)

Would recommend that people download Martins standard form letters for making the complaint as it is straight forward and you can save paying a 3rd party fee for doing very little.

Still, I'm very happy with the result - I upped the payments on my mortgage to make it a repayment ages ago so very little damage was done in the first place. Thanks Martin.

mayb_2

It is better to pay someone to help you claim if you feel you can't do it yourself, but as you say it is easy if you use the forms on this site or the which one. Congratulations on sorting this out, better than doing nothing about it at all and you had already done the sensible thing with your mortgage.

What a situation though - these people should have been made to do this for all who would qualify without each person having to make that decision for themselves. Many of these were sold after the compainies knew they were not going to cover the mortgages anyway, let alone produce a profit and the same thing applied to the sales people then as applied to the Banks now - they hadn't a clue what they were selling in many cases. So what hope of an explanation made well enough for the customer to truly know what they were buying.

Short term thinking leading to long term problems and a lack of confidence from the public has cost them dearly for the second time around. When will they learn the lessons of the endowment fiasco - perhaps they never will and it will be down to the public once again to fight for their rights and refuse to deal with the perpetrators of what is really a fraud of mega proportions.

dunstonh

What a situation though - these people should have been made to do this for all who would qualify without each person having to make that decision for themselves.

That would be fair if it was a case that the majority had been mis-sold. As it was a minority, albeit a significant one, it would have created a large amount of work and expense which would have had to have been passed on to the consumer by other means.

Remember that most complaints that result in redress are because of bad paperwork keeping rather than bad advice. That is what the claims companies pin their hopes on.

If there was a similar issue today on a more recent product class, you would expect the FSA to be more proactive and insist on a review without the need for the consumer to complain first. Data protection act confusion is no longer an issue and record keeping requirements are much better known today so there is no excuse like there may have been in the past. Indeed, this does seem to be the trend as the FSA is writing to a number of firms that have been active in SIPP sales asking them to review the cases and take action where needed. There is no excuse for missing or poor documentation now as firms know what is required and what the consequences will be if they dont comply. That wasnt the case before.

deal with the perpetrators of what is really a fraud of mega proportions.

Consumer fraud is widespread but I wouldnt call it mega. With over 2/3rds of complaints rejected and a significant number of those clearly try-it-on complaints, you have to find a balance.

mayb_2

I don't think that the rejection of a claim makes it a false claim dunstonh as I and others have said before. There are many people on this forum still fighting through the appeals process for redress and often it is because the claim was misshandled by the ombudsman service; a service which didn't really want to see it from the consumer view point anyway as it would cost the finance industry too much to pay out on each claim if they were successful. Hence the moritorium on new claims.

The Ombudsman Service took on a lot of people to deal with the large amount of extra work dealing with these claims, many of whom could have no concept of the reality back in the days the endowments were sold and it is impossible to imagine from where they were drawing their experience for this type of work. No doubt you are right and we are paying for this Ombudsman service to reject our claims and process our appeals. We must not forget we are now financing the banks through our taxes. So whenever the finance industry makes a mess it is the man in the street who pays to put it right for them.

I do not accept that the muddled keeping of paperwork was responsible for this situation at all. The 'modernisation' of the office in banks and insurance companies, together with the call centre culture, means it is difficult to find anyone who knows what they are talking about and prepared to take any responsibility for sorting out problems.

The recent problems being experienced by the banks are all of their own making and greed played a large part in this. The Americans refer to the selling of mortgages to people who couldn't either understand them or afford them as 'soft fraud'. Can you imagine the public being able to excuse themselves under such a heading as I can't? In the end the Banks did not understand the products they were pedeling as they had become too complicated and yet the man in the street is suposed to have this knowledge because - hey you signed this or that bit of paper so you obviously understood something the salesman didn't.

As you are aware, I do not in any way believe that you yourself are responsible for any of this dunstonh but I do think you look at your side of the industry through slightly rose tinted spectacles. Perhaps because you are a knight amongst thieves. No doubt you will accuse me of failing to see its strengths - and you are quite right I do and I believe recent events have bourn me out.

PoundHound_3

My first post to this site so would very much appreciate some advice from those of you out there with more knowledge and experience in these matters than me!

Story: successful mis-selling complaint against a financial services intermediary on a £47k low cost endowment policy taken out in 1997 to cover a 25 year mortgage of the same value. I complained two months ago and the company has sent a letter this week offering £1770, claiming they have calculated this figure in accordance with FSA guidance.

I'm not a greedy person but at the same time I don't trust these people at all and want to undertand whether they have treated me fairly...

They have described having arrived at this figure by:

1. Calculating the remaining balance on my mortgage had I been repaying on a capital & interest basis

2. Comparing that with the original mortage balance

3. Deducting 1 from 2

4. Deducting the endowment surrender value (obtained from the Life company) from 3

5. Comparing the total value of monthly payments which I would have made on a C&I basis with same total which I would have paid on the endowment mortgage = £2k approx (I don't understand their workings for this stage and am going to write to them to ask them explain further)

6. Deducting 4 from 5

I have two specific Qs:

i. The surrender value was obtained from the Life company a month ago. The endowment policy is unitised and given the current fluctuations in market conditions, is now worth several hundred pounds less that the figure which they have quoted in their calculation - should they be basing their working on the latest valuation (this would increase the value of my compensation payout by the same amount)

ii. does £1700 sound reasonable 11years into a £47k policy in light of other peoples' experience in reclaiming?

Thanks in anticipation

dunstonh

i. The surrender value was obtained from the Life company a month ago. The endowment policy is unitised and given the current fluctuations in market conditions, is now worth several hundred pounds less that the figure which they have quoted in their calculation - should they be basing their working on the latest valuation (this would increase the value of my compensation payout by the same amount)

They dont have to do a recalculation if the calculation was done recently. If you insist and they give in it could take a few weeks for them to get it agreed as the surrender value will need to be obtained in writing from the insurer and then the calculation sent to the PI insurer (possibly via a network) and by the time all that happens you could find you lose out as the markets have gone up.

If you take it further to the FOS you end up waiting 6 months or so for them to say the calculation was fair.

ii. does £1700 sound reasonable 11years into a £47k policy in light of other peoples' experience in reclaiming?

No way to say. The charging structures of endomwents are not the same. Higher allocation rates later into policies, differences in surrender penalties and fund performance mean that no two endowments are the same.

mayb_2

There used to be a calculator available through the Which site which was also the same as the one used by the Ombudsman service, but it has disappeared - it may be worth searching the web for information on that. Perhaps you could ask the FSA how this should be applied or even the Ombudsman service as I assume there is a calculation even if you cannot actually compute the figures yourself they may be able to advise you on that.

It may well be worth you getting this revalued as it is not really feasible that the markets will recover that quickly and it may leave you better off in the long run.