Act now on mis-sold endowments: new article

dunstonh

jojo1964 wrote: »

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?

You have three years from being first notified of a high risk of a shortfall. If you are still within that three year period, even if surrendered, then you can complain.

jojo1964

I cashed in my endowment just over 4 years ago, not realising the implications of the shortfall, i take it that means i am unable to claim?

mayb_2

Dave 1003 I would seriously consider your options here if your only hope is that the markets will pick up again in the near future. Not sure why anybody is thinking that is going to happen. The thing to get into right now according to the radio programme I was listening to today is - fish - oily fish and particularly mussels!!!

Detest_Lloyds

turbobob wrote: »

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?

Thanks again TurboBob. You are right - it is a unit linked endowment with no penalty for early surrender. Over what term would I run it? Well put it like this - the RU89 guidelines (and therefore the Bank) conclude that we would have taken out a 25 year repayment mortgage in 1992. In actual fact we would have taken a 20 year repayment mortgage but because early retirement in 2012 was more a wish than set in stone, the higher endowment over 25 years was suggested to us to give the flexibility as 2012 approached. Employment final salary pensions were some years later than 2012 but in 1992 were notoriously easy to get paid early. 2012 was our choice and if we couldn't get access to our pensions then we just keep on working until we could get access. A few years after the mortgage started, private pensions were started and geared to 2012 but apparently that counts for nothing when quantifying "equivalent". As you can see all this points to why we question how a guideline can legally conclude what we would have done 17 years ago if we had chosen a repayment mortgage instead of an endowment.

DAVE1003

HI,
just had a visit from my c.i.s. bloke who used to work in the stock market, so knows a little about what seems to be going on (i know he cann't see into the future).He wasn't pushy at all & showed me how the co-op had performed over the last 5 years or so & said things had now bottomed out. & said i should be inline for a decent finalisation bonus if i left the endowment to run its course which should bring it back into line for paying my mortgage off.
Also i realised that if i cash my endowment in i would have to pay a life insurance premium too.
So i think i'm just going to leave it & hope things turn round before my 2 1/2 years are up to finnish paying my mortgage.
Unless anyone knows any different.

dunstonh

just had a visit from my c.i.s. bloke who used to work in the stock market, so knows a little about what seems to be going on (i know he cann't see into the future).

Working at the stock exchange doesnt necessarily mean you have any knowledge of shares and with respect to him, assuming he did work in equities, how the hell did he end up as a tied sales rep for an insurance company. Not exactly a career ladder but career snake.

showed me how the co-op had performed over the last 5 years or so

Compared to others or in isolation?

said things had now bottomed out. & said i should be inline for a decent finalisation bonus if i left the endowment to run its course which should bring it back into line for paying my mortgage off.

We probably have bottomed out but its still likely to be volatile and could possibly get back down to the trough again.

Also, again with respect, he is a tied agent. Not an IFA. He doesnt hold the authorisation to recommend you cancel the plan. He has to tell you to keep it even if its bad. Thats the instruction from his employer.

Unless anyone knows any different.

Not on the information posted but I would suggest an independent review and not a sales rep patter

DAVE1003

the thing his he didn't try to sell me any other products & was open that their isa's etc weren't the best out in the market.
all he could tell me was i was so close to my completion date that for the past 20 odd years they had performed well & only last year they had lost so my completion bonuses would hopefully bring my policy back to being on track.
i know he's not indipendent but where else can i safely raise the funds to cover my mortgage in 2 1/2 yrs.

mayb_2

My own personal experience with the CIS would lead me to doubt what was being said here - if you haven't had any reports on a year on year basis to tell you what has been hapening with your endowment then that in itself is a cause for concern. If are you saying that you already know that it has performed well for the last 20 years because of the information you have received that is a different matter of course.

At the time I cashed in my own endowment with them the CIS were not paying final bonuses at all and that was certainly within your 20 year period. Of course there are different funds for different investments but the CIS spent a lot of money when they finally modernised their business and stopped sending agents out to collect your money and your business.

The insurance arm of the CIS was originally to have merged with the rest of the business if I remember rightly and this move was delayed - someone may be able to enlighten us as to whether that ever went ahead.

I had a very bad experience in dealing with this company when seeking redress for a very missold policy I had with them. Lying and cheating their way through the process and rewriting history, as well as withdrawing information from their website that the fund had been closed after I complained to the FSA that we had not been informed of the fact at the time. A closed fund is not likely to make any money.

It was a former agent of the company who warned us to look into our policy and how it was performing. He was leaving as he was upset at the way the company was behaving towards its customers and did not feel happy about dealing with customers in a way he felt was misleading them.

I agree with dunstonh that you should seek totally independent advice on this. However, I do not think the market has bottomed out - and would wonder how anyone could think that we know what the bottom is likely to be when the recession has barely started.

dunstonh

and would wonder how anyone could think that we know what the bottom is likely to be when the recession has barely started.

Markets tend to act in advance. They also tend to go up too much in good times and down too much in bad. We are about 15% higher than the low point in November last year. Whilst the recession will keep the volatility going, it is largely priced in already with current expectations on the scale of the recession. If it turns out to be worse than expected, then it will fall back more or take longer to recover. If it turns out better then it will recover quicker and higher. There are already major investors looking for value and that is a good sign. However, no-one knows until they look back with hindsight.

Its a great time to be making pension contributions for the long term but 2.5 years on a low quality with profits fund, which tend to lag behind markets, is not what I would want unless there is a contractual reason why I should stay put.

turbobob

Detest_Lloyds wrote: »

As you can see all this points to why we question how a guideline can legally conclude what we would have done 17 years ago if we had chosen a repayment mortgage instead of an endowment.

Its impossible to say with certainty what you would have done. In the absence of this certainty, reasonable assumptions have to be made. For example, its reasonable to assume that if you were making regular overpayments on your IO mortgage, you would also do the same if you had taken a repayment mortgage, and so on.

Anyway, if you feel you have a strong case for them to run the calculation over a 20 year term, assuming the bank don't agree, the next stage would be to go to FOS. I would guess the adjudicator would suggest a calculation on the following formula:

An RU89 comparison over 25 year term of an interest only mortgage vs repayment morgage
Plus A partial refund of premiums (with simple interest at 8%) in respect of the sum assured mis-match
Less the SV at the date of the calculation.

After the initial adjudication, you have the right of appeal to a senior Ombudsman. The Ombudsman may agree with you, or they may not, but they have to consider all of your points.

PS I used to work in a complaints handling capacity with mortgage endowment cases, but haven't for quite a while now. So my knowledge may not be totally up to date.

Good luck.