Act now on mis-sold endowments: new article

dunstonh

How do I know if I was mis-sold it I took it out 13 years ago, I didn't record the conversation with the guy and can't remember everything he discussed.

You would know if you were mis-sold because you would be saying things like you didnt know that it was subject to investments that can go down as well as up and that you didnt know you could get back less.

Surely the whole point of the Endowment was that it paid off the total I borrowed, what was the point of it if I end up £10,000 or more down by the time it matures, if I have to save money somewhere else to cover the shortfall then it was a complete waste of time. I might as well just cash it in now and get what I can back, it won't be linked to our mortgage for much longer so I don't need to carry on with it to pay off a mortgage, so why pay another 12 years of premiums?

The objective is to repay the mortgage but it doesnt mean it will. The FSA do not allow complaints about investment performance as its impossible to know what future returns are going to be.

My OH took a loan out a couple of years ago and he's just got his PPI back as they checked and said he had a case but he wouldn't have known that if he hadn't applied for it.

The difference with PPI is that it wasnt sold under advice. Nearly all single premium PPI sales are classed as mis-sale. Most PPI sales were sold by unregulated and unauthorised individuals. With an endowment you are effectively accusing an authorised and regulated indivdual of committing fraud. The PPI claim has no impact on the seller. Complaints against authorised individuals are logged against that individual and that individual has to declare complaints to their PI insurer or future employer whether the complaints are upheld or not.

If you have a valid complaint then you should make it because there is no excuse for giving bad advice. However, if you dont have a valid complaint and are just trying it on then you need to be aware that you could be harming the career prospects of an individual or creating a cost to them which comes out of their pocket.

Librettist

Here is my situation.

I have two endowments. One with Axa and one with Legal & General. I took the first one out when I was 20 years of age and the second at 25. On both occasions the person selling them to me recommended them as the "done thing" and there was never any talk of what happens if targets are not met, just that the product was designed to pay off the mortgage amount with a nice little earner on top. Obviously, I was naive in my early 20's and wouldn't dream of taking out a similar product now but looking back I feel as if I was led into it by someone who was just hungry for his commission.

Both policies are due to mature in ten years time. The first has a predicted shortfall of about 15% and the second is at the moment worth approximately 2/3rds of the total amount I have paid in to it - and it's been running for over nine years. I have switched the the One Account (another depressing story!) and have been overpaying as much as I can to try and offset the fact that these Endowments are not performing at all well.

It's only recently (the last few months) that I have been doing a bit of self-assessment on my finances and realising the mistakes I have made. I wonder if I have a case for complaint? Any advice appreciated.

mayb_2

If you believe that you were missold the endowments - ie that you did not understand the possibility that your mortgage would not be paid at the end of term and the risks involved - then you should make a complaint. If, however, you have received warnings of the shortfall including a final warning with a cut off date for complaint, then you have to make your complaint before the time bar takes effect. You may be entitiled to redress but bear in mind that this puts you back into the position you would have been in with an ordinary repayment mortgage. You do still have to put something in place to pay off the remaining balance. The One Account is quite helpful if you want to make overpayments into your mortgage if you have a mortgage with them as there is no limit on how much you can overpay in any one year as with some mortgages. I was using them this way at one time myself and the on line service is much improved from the time it was initiated.

dunstonh

Obviously, I was naive in my early 20's and wouldn't dream of taking out a similar product now but looking back I feel as if I was led into it by someone who was just hungry for his commission.

You dont say how old you are now but you need to remember that until 1999, no endowment had ever failed to hit target and the media were pro endowment and consumers association were giving best buy awards to endowments. Its easier to judge with hindsight. One of the most common reasons for picking endowment was actually the lower monthly cost compared to repayment basis.

I wonder if I have a case for complaint?

If you were mis-sold then yes. If not, no.

neal_page

Quick question

I have two endowment mortgages from '93 and '95 - around £32K and £8K respectively. In 2006 I was paid around £1500 by Standard Life as a result of them being mis-sold. With hindsight I probably shouldn't have accepted this money. I've since looked at other papers from them which pre-date this payment and even my lowest loss would be greater than that which they paid me. Can I now go back and ask them to review or will I just be banging my head off a wall?

Librettist

Thanks for your help chaps.

mayb wrote: »

If, however, you have received warnings of the shortfall including a final warning with a cut off date for complaint, then you have to make your complaint before the time bar takes effect.

I recieved an Amber warning sometime last year but what really made me notice something wasn't right was when the value of my plan dropped by about 25% in one six month period. There was nothing about making a complaint or about a cut off period.

dunstonh wrote: »

You dont say how old you are now but you need to remember that until 1999, no endowment had ever failed to hit target and the media were pro endowment and consumers association were giving best buy awards to endowments.

I'm 35 now. Endowments were taken out in 1994 and 1999.

turbobob

neal_page wrote: »

Quick question

I have two endowment mortgages from '93 and '95 - around £32K and £8K respectively. In 2006 I was paid around £1500 by Standard Life as a result of them being mis-sold. With hindsight I probably shouldn't have accepted this money. I've since looked at other papers from them which pre-date this payment and even my lowest loss would be greater than that which they paid me. Can I now go back and ask them to review or will I just be banging my head off a wall?

Assuming you had a standard redress calculation.. The amount you were paid would have been the amount needed at the time (based on the surrender value then) to put you in the same position as you'd have been in if you'd taken a repayment mortgage. If you'd taken the compensation and the surrender value, and paid it off your mortgage and converted the remainder to repayment, theoretically you would be in the same position as if you'd taken a repayment mortgage at the start. The projected shortfall at the time (or now) has no bearing on how compensation is worked out.

And yes you would be wasting your time asking for any more.

neal_page

turbobob wrote: »

Assuming you had a standard redress calculation.. The amount you were paid would have been the amount needed at the time (based on the surrender value then) to put you in the same position as you'd have been in if you'd taken a repayment mortgage. If you'd taken the compensation and the surrender value, and paid it off your mortgage and converted the remainder to repayment, theoretically you would be in the same position as if you'd taken a repayment mortgage at the start. The projected shortfall at the time (or now) has no bearing on how compensation is worked out.

And yes you would be wasting your time asking for any more.

Thanks. Appreciate the answer. If you don't ask, you don't get.

mayb_2

You should be ok to go ahead with a claim then librettist - hopefully you will get a favourable response from the company that sold them to you, as the Ombudsman route is a long one these days. Good luck with that.

mayb_2

I took it for granted that I should use the money from redress to pay off part of my mortgage turbobob, but thinking about it I expect there may be people who didn't do that and presumably just replaced the whole lot with a new repayment mortgage. Who do you think is better off at this point?