Act now on mis-sold endowments: new article

efunc

thank you, that's very helpful.

As to the 'why' I recall it was the only product on offer and the consultant recommended it. I did have no plan to get a mortgage so I always wondered why he recommended it however. Obviously I took him up on it, so I was the foolish one here.

However, is there any deadline issues I need to bear in mind? I've been getting 'Shortfall' warnings for about the past 5 years without knowing what I could do about it.

Finally, the sum insured was £13,733 and the current projection is about half that figure. Given the figures are relatively small by today's standards is this likely to be a huge can of worms for little gain? Will the original consultant be involved in the investigation?

Kazzea

My parents had 3 endowment policies - one with Cornhill taken out in 1987 and two with Scottish Life taken out in 1991. They bought from the same advisor who ran his own firm who is now deceased as is his parter and the firm no longer exists. What can they do to try and reclaim? They were sold on the basis that the policies would pay off their mortagage earkly AND give them a lump sum (which they all failed to do)

Thanks

dunstonh

Kazzea wrote: »

My parents had 3 endowment policies - one with Cornhill taken out in 1987 and two with Scottish Life taken out in 1991. They bought from the same advisor who ran his own firm who is now deceased as is his parter and the firm no longer exists. What can they do to try and reclaim? They were sold on the basis that the policies would pay off their mortagage earkly AND give them a lump sum (which they all failed to do)

Thanks

You can forget the 1987 plan as that was taken out before the FSCS came into existence. The 1991 plans could qualify if the endowments are not time barred. Three quarters of endowments are now timebarred so you are leaving it a bit late, if it isnt already.

Being sold on the basis they could pay off the mortgage early or pay a lump sum is not grounds for complaint. Being told they would do is potential grounds (assuming documentary evidence doesnt prove otherwise).

If you believe you are not timebarred and you have a complaint you should make it to the FSCS.

efunc

dunstonh, if you don't mind, how would this pre-FSCS business play out in my case you commented on above? I took my policy out in Jan 1987 too. thanks for your help.

dunstonh

efunc wrote: »

dunstonh, if you don't mind, how would this pre-FSCS business play out in my case you commented on above? I took my policy out in Jan 1987 too. thanks for your help.

Options are limited.

If the company do not voluntarily agree to review the case then its game over. The FOS wont look at it unless the company agree. The FSCS wont touch it and the FSA dont handle consumer complaints. None of the "F"s will be any use to you.

marmitequeen

Hi all, I've been reading all this avidly and have totally confused myself so I'm turning to all you experts.

I was sold a Scottish Amicable Home Purchaser Endowment Plan (which is now run by Prudential) in Dec 1996 (to mature 2021) and at the time the advisor told me about the different sorts but very clearly pushed the Endowment. Specifically, I remember a conversation about one of his firm's clients who had just got theirs through with enough extra to buy sports cars (appealed to my greedy, grabbing nature, I admit). We set the projected limit at 6% growth, and all the literature refers to this as 'low' and mentions my 'cautious' approach. We discussed the plan covering the whole amount and he assured me it would, with extra to spare. I wasn't that bothered about the extra, but I did want to ensure the mortgage would be covered. I am embarrassed to write this now, but I signed those papers convinced this was a secure thing.

Now, here's the point to my ramble: I've been getting 'green' letters every year since they started sending them, so was feeling rather smug that my 'cautious' approach was paying off. However, recently a met with a financial advisor about pension stuff and he asked to look at the letters. He said although they say it is fine, it is not as good as it looks as it needs 5% each year to pay it off. I signed some papers so he could 'investigate' it for me and he came up with lots of numbers as to why it's bad.

Essentially, as I understand it, the costs outweigh the interest that is currently being made so the only prospect on achieving any capital growth is via the terminal bonus. I don't have a problem with this if it's going to go somewhere near paying off my mortgage, but he seems to think this is a high risk strategy.

I'm really sorry I appear to have written an essay here, but why am I getting 'green' letters if it's not on track?

Aggghhhhh! Confused!

dunstonh

I'm really sorry I appear to have written an essay here, but why am I getting 'green' letters if it's not on track?

I'm not sure why you have been told that. Green ones are on track at that point. It doesnt mean they will be in future but if you are in a green position now then that looks positive. Its actually a case where many amber ones and even some red ones are on track to hit target ok but not the other way round.

It may be a case of getting out whilst you are ahead and switching to repayment basis or it may be a case of the adviser making you aware of the risks and you now becoming uncomfortable with it and the adviser seeing that.

Was the adviser an IFA? They are only advisers that allowed to discuss and make recommendation on Scot Am plans. A tied agent or multi-tied adviser is not (although they often do but not officially). Scot Am have a very good record. Over 90% of endowments maturing in recent years have exceeded target and even those that fell short only did so on average by a couple of hundred pounds. They have consistently performed above 7% p.a. as an average. It will have taken a hit recently but there are always hits at various points in the typical 25 year period. Whilst the annual bonus rate is unlikely to hit 6%, that is only part of the return. The rest is made up with the terminal bonus. Some endowments are poor quality but you usually find Pru and Scot Am ones are much better quality and have a much better track record.

marmitequeen

dunstonh wrote: »

I'm not sure why you have been told that. Green ones are on track at that point. It doesnt mean they will be in future but if you are in a green position now then that looks positive. Its actually a case where many amber ones and even some red ones are on track to hit target ok but not the other way round.

Thanks so much for this, he is an IFA and I realise from this that I just need to quiz him further on what exactly he is saying, and why. I think it knocked my confidence in understanding what the letters meant and made me feel rather silly. However, I see that I shouldn't be panicked into doing something I don't totally understand - I'm the customer so can keep asking 'why'.

I really appreciate your time taken to answer. Thanks. x

dunstonh

Its quite possible that he doesnt feel your risk profile fits what you have and is taking a more cautious viewpoint. We pick up on what you say in conversations. Also, there is an element of opinion in there. Most With Profit endowments are obsolete and a waste of money. Pru and NU are probably the main exceptions in some cases. His view is that there may be no point making exceptions but I suspect he has focused on the risks side more of what may happen if the lower rate is not achieved (which is a possibility) and is basing his advice on that.

Projection letters are not that reliable by themselves. A good fund that turns in a regular 8% a year on average could show a red warning despite having good potential to hit target and a bad fund now could show a green because it used to be good in the past but has been sold off to a new company who are paying very little going forward.

It is so much easier to give advice to people that ask questions and engage in the process. So dont feel silly. I would rather have a client asking questions and showing an interest than one that just sits there and nods and gives me no clues to whether they follow it or not.

justine22

Sent the template letter regarding being mis-sold my endowment in 1996 and was sent a fairly simple questionnaire. To be honest I didn't have some of the information they wanted so put rough figures and dates.

I was told that I couldn't claim on the basis that I originally thought I could, which was that my endowment hasn't performed and that I was sold it on the basis that I would have the value I needed and more by the end (it's half way through a 25 year period and is only worth about £7.5k when it's meant to be worth £30k by the end. Basically that means that in 12 and a half years of paying I've made £200!!!). I was however told that they would evaluate my claim based on the risk I was exposed to at the time (as I was so young and naive).

I have today been offered £3,281.48 which is far more than I was expecting so I'm going to accept!! :j

Only slight downfall is that when I initially made enquiries about the value of the endowment I was told it was worth £7.5k, however today I was told it's only worth £7.3k so I'm going to lose out £200 despite the fact that I've paid more money into the policy over the past 3 months!! :mad:

Overall good news though so can't grumble!! :T