Act now on mis-sold endowments: new article

dunstonh

DAVE1003 wrote: »

so it doesn't look like i have a claim then so would you if you were in my position cash the endowment in now or leave it to run its full course

Its only £100 off at what could be the bottom of the market. Depends on the type of endowment and where its invested but if it hasnt got long left, its unit linked or a good WP fund, then I would be inclined to leave it. However, impossible to really give any judgement without knowing about the policy. Too many variables to take into account for a generic answer.

DAVE1003

all i know within 6 months it's lost £900 from what it was worth & with this recession supposedly going to last 2-3 yrs it could go down even more & thats what i've left on my endowement.
thanks

dunstonh

DAVE1003 wrote: »

all i know within 6 months it's lost £900 from what it was worth & with this recession supposedly going to last 2-3 yrs it could go down even more & thats what i've left on my endowement.
thanks

The reasons the markets dropped so sharply was the banking crisis and the recession that was expected to last for a period. The markets dont follow the news. They try to pre-empt it. This is why the markets were falling 12 months before anyone relying on the media knew much about it.

The fear money and low liquidity money has largely been shaken out now. That is why the markets are up on the low points. There will still be daily volatility as there always is after a crash but your remaining monthly payments are now buying investments cheaper.

Also, your surrender value may not be the same as your current value. If it is, then there may be the arguement to go with safety. If it suffers a penalty charge then it may be worth waiting.

DAVE1003

i hope this info can make things clearer for anyone in the know who'd like to give me a bit of advice.
i started my endowment in july 86 which is from c.i.s. & is called a low cost endowment.
i was promised this would not only pay the mortgage but leave me a tidy little sum as well.
6 months ago it was on track with projections between + £200 & £1500 now i have projections of minus -£560 to excess of £400. the average @ 5.75% is minus -£100 at the moment.
i've no idea what to do (i know it isn't £1000's of pounds like some people).
but i'd like to have an idea what the best thing to do is..........
thanks again.

Detest_Lloyds

turbobob wrote: »

The calculation compare two things:

- The policies surrender value versus the amount an equivalent repayment mortgage would have reduced by.
- The costs of your actual arrangement against a repayment mortgage (and supporting life cover, if needed).

If the endowment target amount is significantly higher than the mortgage, and that person has been paying more than they would have been paying on a repayment mortgage, then the compensation can be adjusted to take account of this. This might be through a partial refund of premiums.

In simple terms though, yes the person who has paid more may get less compensation.

Thanks for the reply Turbobob. May I please ask your opinion on this:- 1992 and mortgage = £87,500 over 25 years. Endowment target value = £107,000 but also over 25 years and costs £160/month. 2009 - mortgage is still £87,500 outstanding and endowment value is £29,000. Apparently an "equivalent repayment mortgage" would have been over 25 years. Why 25 years? Where does it state in the RU89 guidelines how to decide what value or number should be applied to derive the "equivalent"? Thanks.

turbobob

Detest_Lloyds wrote: »

Thanks for the reply Turbobob. May I please ask your opinion on this:- 1992 and mortgage = £87,500 over 25 years. Endowment target value = £107,000 but also over 25 years and costs £160/month. 2009 - mortgage is still £87,500 outstanding and endowment value is £29,000. Apparently an "equivalent repayment mortgage" would have been over 25 years. Why 25 years? Where does it state in the RU89 guidelines how to decide what value or number should be applied to derive the "equivalent"? Thanks.

Hi, it really depends on the case specifics. It probably helps if you look at the simplest type of calculation.

Say you have an endowment for £87500 taken for 25 years, and an interest only mortgage for £87500 over 25 years, starting on the same date as the endowment. In that case, the equivalent repayment mortgage would clearly be 25 years, starting on the same day as the endowment. Why would it be over any other term?

Where the mortgage term becomes more debatable is where there is say, a "forward sale". I.e. say you took out a 25 year endowment in 1992, but didn't actually take a mortgage until 1997. Do you calculate over a 20 or 25 year term?

I believe the FOS view is that in these cases, the term of the mortgage should be set to be equal to the term of the endowment, so 25 years. Premiums paid prior to the mortgage starting are refunded with interest in this type of calculation.

The RU89 regulations are set out very broadly in the FSA's DISP rules http://fsahandbook.info/FSA/html/handbook/DISP/App/1/2 but this is fairly high level stuff and does not get into every possibility.

For more complex cases FOS have published technical notes which are based on previous Ombudsman rulings - http://www.financial-ombudsman.org.uk/publications/guidance/mtge_endowment_redress.htm

Detest_Lloyds

turbobob wrote: »

Hi, it really depends on the case specifics. It probably helps if you look at the simplest type of calculation.

Say you have an endowment for £87500 taken for 25 years, and an interest only mortgage for £87500 over 25 years, starting on the same date as the endowment. In that case, the equivalent repayment mortgage would clearly be 25 years, starting on the same day as the endowment. Why would it be over any other term?

Where the mortgage term becomes more debatable is where there is say, a "forward sale". I.e. say you took out a 25 year endowment in 1992, but didn't actually take a mortgage until 1997. Do you calculate over a 20 or 25 year term?

I believe the FOS view is that in these cases, the term of the mortgage should be set to be equal to the term of the endowment, so 25 years. Premiums paid prior to the mortgage starting are refunded with interest in this type of calculation.

The RU89 regulations are set out very broadly in the FSA's DISP rules http://fsahandbook.info/FSA/html/handbook/DISP/App/1/2 but this is fairly high level stuff and does not get into every possibility.

For more complex cases FOS have published technical notes which are based on previous Ombudsman rulings - http://www.financial-ombudsman.org.uk/publications/guidance/mtge_endowment_redress.htm

Thanks once again TurboBob. Because the endowment is £107,000 not £87,500. Our endowment policy specifically states one of the things it can offer is the "possibility to repay the mortgage early". Most people probably took an endowment looking forward to paying the mortgage after the full term and receiving a nice lump sum as well. Some (myself included) probably looked to repay the mortgage early. By taking out an endowment much higher than the mortgage the possibility of repaying early was no longer a possibility - it was guaranteed - or so we were advised but with no written evidence to prove this. By implication that is why I question 25 years being "equivalent". We stated we would like to try and retire around 2012 (some 20 years ahead) but there would be flexibility because, in 1992, who knows what 20 years ahead will be like. Critically none of this is written down and the Bank is taking full advantage of this.

turbobob

I can see where you are coming from. I take it this was a unit linked endowment with no penalty for early surrender? What I think you will come up against though is that the word "possibility" is clear and does not guarantee early repayment.

Over what term would you run it? 20 years? 22 years and 3 months? The known fact here is that the term of the mortgage and the policy was 25 years.

However, if the term of the policy runs past your retirement age, then if this aspect of the complaint is upheld then it could be calculated over a shorter term (normally to your retirement date). This would have to be more concrete than an aspirational retirement date though. Did you have pensions in place set to mature in 2012, etc?

jojo1964

Is it still possible to claim for a mis-sold endowment policy if i have cashed in the endowment, and re-mortgaged to a different company?

EdInvestor

Note to posters who want to know what to do about an underperforming endowment/shortfall.

Post a new thread giving details of the endowment (see the many existing endowment threads in the forum for the list of details needed).

Do not post details on this thread,which only covers misselling complaints.