Act now on mis-sold endowments: new article

essaj

I took out 2 endowment policies via a Financial Advisor with MGM Assurance, the first in 1985 with a target sum of £25k and another smaller one in 1986 for a target sum of £4k, as I increased my mortgage to £30k. Both due to complete next year. I've just received notification that the larger one could have a shortfall of over £2k. I've looked at the Which? site to draft a complaint letter as my advisor sold the plans to me on the basis of not only paying off the mortgage, but they would also give me a large lump sum........sounds familar doesn't it!!

Before I send my letter to the financial advisor's company, am I wasting my time as the plans started before 1988?

dunstonh

am I wasting my time as the plans started before 1988?

If the adviser as an agent of MGM then no you are not wasting your time. However, if the agent was not tied to the insurance company then you have no-one to complain to as its pre regulation.

MoKa_2

I lodged a complaint about missold endowment about 18 months ago and the claim was upheld. My elation was short lived when they offered me £18 compensation (YES, £18). I suspect that this is because when I moved house just before I submitted my claim, I switched to a repayment mortgage as I was concerned about the shortfall in my Endowment, so they calculated that I wouldn't be out of pocket (I may have that completely wrong though). I was a bit peeved at the amount and didn't bother to send the claim (and nor did I return their pre-printed acknowledgement that I was satisfied that the claim was settled, so not sure if that means it's still open).

Anyway, fast forward to this week, when my Standard Life annual statement came in for my endowment. It's now classed as HIGH risk of having a shortfall, so I sat down and did some quick calculations:

I'm rounding somewhat, but the gist is:
Original target amount: £49k
Monthly payment £90
Length of policy so far: 11 years
Balance of policy to run: 14 years
Current forecast: Low £28k Medium £36k High £45k

So, even at high performing (8%) return, it won't make original forecast and at low (4%), if I continue paying same monthly amount to term, I will have made a profit of just £1700. The valuation this year is showing a loss on what I've paid in of £700.

Does anyone know if I can go back to Standard Life now and resubmit a claim to try to get more compensation than just the £13 they offered before?

If not, any thoughts on whether I should consider surrendering the policy now (at a loss, but perhaps saving future bigger losses) and putting the cash into an ISA, or whether I should just let this run its course and accept that I may just break even (if I'm lucky) but I'll have life cover (paying the full original target amount of £49k) for the duration of the policy.

My plan since switching to a repayment mortgage has been to make one big overpayment to the mortgage when this matures, but now I'm wondering if I should just cut my losses.

MoKa_2

Sorry for the double post, but I just looked back on my posting history and found a response to my original post (in Nov 07) about my claim by Dunstonh.

Dunstonh - At the time you said your experience was that SL endowments hadn't been performing as badly as they were suggesting in their shortfall projections, and that I was probably better off than I thought.

Given the current financial climate, do I have more reason to be concerned now, or is the situation still the same? I think the endowment is based on the stock market, in a managed fund, so I'm not sure how or if that will affect things.

Kim_Possible

HI, I have a question on behalf of my mother:
My parents recently completed on their moragage which consisted of the morgage and 2 endowment policies.
However when the morgage matured it had a shortfall and so did one of the endowment policies.

What can she do, they took out the moragage in 1985 with the advise that the morage would NOT make a loss and to take the endowment policies,as a gurentee,which would make a profit .

However they have both made a shortfall. can she re claim for the loss of the morage and the loss on the endowment policy?

And where can i find the info- [i was reading it last night about which and the financial obusman now cant find!]

turbobob

Kim, I assume 1885 should read 1985?! They MIGHT be able to claim about the advice they were given when they took out the policies.

Two main things to look at before you go any further. Remember the claim is about the advice they were given at the time, not about the fact theres a shortfall. Therefore it will be against whoever sold them the policy/s. If they were bought through a "rep" from the insurance company, then potentially there is a claim. If they were bought through anyone else (an estate agent or mortgage broker for example) then you will probably be out of luck. This is because before 29 April 1988 there were no regulations governing the sale of endowments and firms don't have to investigate complaints about advice before this date. Some firms (insurance companies and maybe banks and building societies) have agreed to investigate complaints about sales before this date.

Second main problem is if they've past a time bar date. They might have been given a final date to complain in the review letters they've received.

Kim_Possible

thank you for your advise, turbobob, yes it was 1985 [silly typo]!
The policy was bought through a representivie for Norwich Union in 85. I understand this was 3 years before the regulation and therefore maybe not viable as a claim, however will still try

dunstonh

My elation was short lived when they offered me £18 compensation (YES, £18). I suspect that this is because when I moved house just before I submitted my claim, I switched to a repayment mortgage as I was concerned about the shortfall in my Endowment, so they calculated that I wouldn't be out of pocket (I may have that completely wrong though).

Endowment redress is to put you in the position you would have been had you chosen repayment mortgage (which is what you are saying you would have been on if you had the choice). So, £18 would have done that. As it happens, it probably means the endowment option was better for you as the redress method uses the surrender value and not the current value.

Does anyone know if I can go back to Standard Life now and resubmit a claim to try to get more compensation than just the £13 they offered before?

You have no right to ask for that and you cannot submit another claim or ask for the FOS to look into it. You can ask for your £18 though.

At the time you said your experience was that SL endowments hadn't been performing as badly as they were suggesting in their shortfall projections, and that I was probably better off than I thought.

SL endowment projections from a few years back didnt include any terminal bonus accrued to date and often projected from the surrender value and not the current value. Their projections did understate the likely returns over the long term. You dont tend to see it so much now. The projections dont include any mortgage promise value that may exist either. The scale of events that have occured in the last year means it may be a while before SL endowments come back round and if it was mine, I would be making some serious decisions on whether to keep it or not.

Saffycat_2

Hi not sure if this comes under endowments mis-sold but can I complain somewhere about my mother who bought a LIFETIME Mortgage from Norwich Union when she was 74 in 2001 so she had some money £30,000 to be exact!!!!...since then she has been diagnosed with Alzheimers and had to move into a home. We have, luckily just sold her apartment and had to pay Norwich Union almost another £30,000!!!!!! So her £30,000 has cost nearly £60,000 over 9 years! Is this right? Can I say she was mis-sold the policy? Who do I go to?

annlouise

We have never tried to claim for our endowment as we were aware of the risks involved, however, we have just discovered that we are not covered for critical illness, just basic life assurance, with the policy. We were sold it on the basis that we both thought we had critical illness cover - does anyone know if we would have a claim on this basis?