Act now on mis-sold endowments: new article

turbobob

mayb wrote: »

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?

How do you mean mayb? If they switched to a repayment mortgage over the original term, without reducing the mortgage, there would be no risk of shortfall. The endowment, if kept, would effectively be a non mortgage savings plan. However, their mortgage payments would increase substantially. They could have extended the term to lower the repayments. But what did they do with the compensation? I think if someone did do that, and used the compensation for other purposes, it must have been a conscious choice on their part.

I think if someone wasted the redress and kept their arrangements unchanged with the endowment still supporting their mortgage, I've got little sympathy. So much stuff is sent out e.g. FSA fact sheets advising on how to deal with a shortfall, and has been for years. There has to be some personal responsibilty somewhere!

I've seen some ridiculous things in my time - complaints about delays paying redress because they had the compensation earmarked to pay for a cruise etc :rolleyes: So apologies but I'm afraid I've got a bit cynical!

treliac

mayb wrote: »

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?

Then, presumably, they would have needed to take a smaller loan, i.e. the same outcome as paying down on the original one. Provided they used the redress monies towards their mortgage, then it wouldn't make any difference how they organised it.

If not, then I agree entirely with bob's sentiments.

look_at_the_price

I have been inundated with requests from these companies telling me that they can reclaim thousands due to me being missold my endowment policy. I have explained that I bought this policy in 1986 and according to all the info I have read I am unable to claim as the Act only came into force in 1988. I have already written to the company, the IFA and the FS ombudsman and have been tolsd to forget it, these companis insist that I still have a claim, can anyone advise or does anyone know of a succesful claim pre 1988.

Cheers:o

treliac

Our claim dated back to 1986 but the company admitted their missale; they then tried to underpay redress. The FOS agreed with us. I believe we were on more solid ground as we were missold by the company's own salesman rather than an IFA/third party and this does make a difference.

Nevertheless, if your complaint has gone as far as the ombudsman and failed, you are not going to get any further with a claims company. They don't do anything specific to your personal circumstances and putting in a general, template type complaint won't get you anywhere. They are only looking for easy money, not real work!

Certainly don't pay a claims company money for them to 'act on your behalf.' This is, in fact, where they will be making their money - from you rather than your endowment provider.

The only claims company I would ever consider using is one of the social enterprise ones who only charge you the £10 it costs to access your file from the company you are complaining about.

Out of curiosity, how did all these claims companies you refer to, know of your situation? We've never been approached by anyone.

dunstonh

I have explained that I bought this policy in 1986 and according to all the info I have read I am unable to claim as the Act only came into force in 1988.

<snip>
these companis insist that I still have a claim,

You dont have the ability to claim.

If you applied before 29th April 1988 and didnt use an agent of the insurance company but used a financial services firm (what later became IFAs) then that firm has to agree to voluntarily agree to review your complaint. If they dont want to, they dont have to and the FOS has no juridstiction unless they agree to a review. If they dont the FOS cant look at it.

The claims companies have no ability to bypass those rules. Some will be looking for an up front payment. Others that dont have up front payments but telling you that you have a claim just indicates how bad their knowledge is and that you shouldnt use them

turbobob

look_at_the_price wrote: »

I have been inundated with requests from these companies telling me that they can reclaim thousands due to me being missold my endowment policy. I have explained that I bought this policy in 1986 and according to all the info I have read I am unable to claim as the Act only came into force in 1988. I have already written to the company, the IFA and the FS ombudsman and have been tolsd to forget it, these companis insist that I still have a claim, can anyone advise or does anyone know of a succesful claim pre 1988.

Cheers:o

There is one company that I'm aware is still aggressively targeting people (cold calling) into putting in complaints. Most seem to have called it a day. There's nothing they can do for you as you have already exhausted the complaint process.

mayb_2

Sorry turbobob didn't make myself clear obviously at the time and haven't a clue what I thought when I wrote it!! Something to do with were you better off spending the redress money and remortgaging for the whole amount, or paying off the mortgage with the redress and taking out a smaller mortgage. At the moment mortgages are very cheap and interest has been very low for a few years now. So overall if you had your money back and were starting again are you better off than if you had actually paid an original repayment mortgage from day one but at a much higher rate of interest? That is the best I can do to explain what I meant.

turbobob

mayb wrote: »

Sorry turbobob didn't make myself clear obviously at the time and haven't a clue what I thought when I wrote it!! Something to do with were you better off spending the redress money and remortgaging for the whole amount, or paying off the mortgage with the redress and taking out a smaller mortgage. At the moment mortgages are very cheap and interest has been very low for a few years now. So overall if you had your money back and were starting again are you better off than if you had actually paid an original repayment mortgage from day one but at a much higher rate of interest? That is the best I can do to explain what I meant.

I think I see what you mean The redress is intended to restore your capital position to what it would be if you'd taken out a capital and interest (repayment) mortgage at the start. The redress calculation compares interest only and repayment mortgages based on actual interest rates. In theory, the aim of the redress is that you should be neither better or worse off through being "mis-sold" the policy with an interest only mortgage. In reality, the endowment/interest only mortgage combination was usually cheaper than a repayment mortgage, and savings from lower outgoings are not deducted from the redress. So you gain through any savings you've already made.

Interest rates are currently very low yes, but obviously the capital has got to be repaid to the lender as well. If someone had a 25 year interest only mortgage with say 5 years left to go, and they change it to repayment from interest only then low interest rates or not, their monthly repayment would go up substantially. This is because previously they've only been paying the interest, and suddenly they'd be in a position of having to pay off the capital in a short period.

efunc

I would very much appreciate some advice on this endowment business as it's been at the back of my mind for some time but I was never very clued up as to what I had got myself in for until I read this thread.

I took out a 25 year 'Mortgage Manager' policy with ManuLife in 1987 when I was a wee 18 year old. I have no idea how or why, but as I recall my dad introduced me to a consultant and and half an hour later I had somehow signed up for this scheme. The details are sketchy to say the least because I was a little green. I don't know why I needed this product because I didn't have a mortgage and wasn't planing on getting one any time soon - I was off to University where I would be living in halls for the next 4 years for one thing!

Anyway, the product was to pay out £13,733 (assuming 7.5% growth) or £19,745 (assuming 10%) with a surplus of £6,012 after repayment of mortgage.

The advisor added that "£1000 invested in the managed fund in 1978 is worth £3,808 right now. At current growth rate the plan should leave a surplus of £24,000 - £30,000." This no doubt sounded attractive to me at the time and I felt it would provide the deposit for my first property. After all this time of course it is likely to pay out only £6,000 or so when it matures in 2012.

Sorry for the lengthy ramble. One of the points I've struggled with is that I have been receiving red letter warnings advising me that the policy is severely under-performing and that I should speak to my Mortgage provider. I have never known what to do with these letters or how to respond, since I don't have a Mortgage or a Mortgage provider! Nonetheless I have been very concerned that I will not have the large deposit to buy my first house that I was led to believe I would have at the end. Since all the claims procedures I've seen seem to revolve around the ability to pay off an existing mortgage what am I to do? Do I still have grounds for seeking compensation?

thanks very much in advance!

dunstonh

Do I still have grounds for seeking compensation?

Yes and No.

Starting with the "no". You have no recollection as to the reasons why or how you took it out. However, your dad was involved. So, realistically how can you claim a fraud took place if you dont remember?

However, on to the "yes", you didnt have a mortgage and were not buying at the time so a sale of a mortgage endowment is not suitable. These pre-sale endowment sales nearly always get classed as upheld complaints (although in more recent times certain groups, such as armed forces, have found decisions go against them as pre-sale endowments were technically a suitable product).