Act now on mis-sold endowments: new article

LittleMissUnhappy

Sorry to butt in on this thread.

My mum and dad took out an endowment mortgage, it hasnt been hitting the targets for a few years so about 4 years ago they took out a repayment mortgage but continue to pay the endowment.

They were told the endowment was the best option, they would have enough money to pay mortgage plus a substantial amount left over....blah blah blah.

Last year or maybe the year before I looked into the mis-selling side of things sent a letter to Standard Life but got a reply saying as they didn't sell the endowment they were not responsible and as the policy was taken out before 28 August 1988 nothing that can be done.

So that was that.......or is it????

Can anymore be done? The original endowment was arranged with a local finance company who are no longer around the endowment is with Standard Life.

Can anyone help or advise

Many thanks in advance:D

added: this was taken out in 1987

pencilpot

In 1984 my husband and I took out an endowment policy with Legal and General on the advice that it would cover the needed life assurance against a repayment mortgage and would provide an investment lump sum.

We were sold a low start build up plan with premiums increasing over the first 5 years.


We were in our mid twenties and my husband had just changed jobs from a stable company to a junior sales position with no experience.

We had two or more reviews with Legal and General employees over the following years and on each occasion were advised to continue the policy rather than surrender due to the value of cover, its suitability for our needs and its projected outturn (in particular terminal bonuses).

The policy matured recently and paid out £19400 but we have our written quote from 1984 which has what was explained to us as a conservative projected value of £33084.00.

We are in contact with the Financial Ombudsman Service who forwarded a complaint to Legal and General for us. We would be grateful for any advice in submitting our claim especially since we had a repayment mortgage and my understanding is that we are not claiming for shortfall but for the poor advice given.

dunstonh

We are in contact with the Financial Ombudsman Service who forwarded a complaint to Legal and General for us. We would be grateful for any advice in submitting our claim especially since we had a repayment mortgage and my understanding is that we are not claiming for shortfall but for the poor advice given.

The FOS cannot deal with the complaint until L&G have rejected it. L&G were active with time bars and there is a good chance that your ability to put a complaint in has long gone. However, they should be able to confirm that to you or not.

If the complaint is reviewed, it will be based on the rules that were in place in 1984. Which is virtually none. The projection examples shown on the illustrations would be higher than what you get as they were based on past performance and much higher than those used today. However, they are only examples and not guaranteed. So, no complaint would stand up on those grounds.

LAPR tax relief was abolished on 13th March 1984. Was yours taken out before that or after that?
How much did yours fall short by from the target amount?

The reason those two questions are important is that endowment mortgages were typically cheaper than repayment mortgages. With LAPR, even more so. So, if the shortfall is very small at the end but, say £2000 but your monthly saving over repayment mortgage was £10, then over a 25 year term you saved £3000. The net effect puts you £1000 better off with endowment compared to repayment, even with a shortfall.

mayb_2

I got totally lost in that dunstonh. I would have thought that if you had a return given to you in writing and were encouraged to keep on with the policy because of losing the terminal bonus etc, you would have a very good case for a missale - at any point in time. This must be a breach of contract surely as figures were given. We were sold a very similar product in 1992 and received redress without any arguments. We had nothing in writing to say that we would receive this or that amount but it must be assumed that the figure would be in line with the mortgage that it was bought to repay. The complaint has to be that you did not understand the risk involved in using this policy to pay your mortgage - that you did not understand that it may not reach its target.

Old_Git

I took out an endowment with SL (sold via Halifax ) in 1991 .
The endowment was for £16625 ,mature date 2016 .
current value Feb 2009 = £5,703.83 .
Do I have any grounds for a claim .

dunstonh

I would have thought that if you had a return given to you in writing and were encouraged to keep on with the policy because of losing the terminal bonus etc, you would have a very good case for a missale - at any point in time.

Actually, its the opposite. The reviews suggest that there were concerns and knowledge of volatility.

Plus, remember that tied agents are not allowed to recommend the cancellation of existing plans. So, even if the plans are the worst in the world, they cant tell you to cancel them. pencilpot stated they were L&G reps. Its one of the major limitations of using tied reps.

This must be a breach of contract surely as figures were given.

There would have been nothing in writing other than perhaps a valuation and standard projections. If the reps were foolish enough in writing that it would pay off the mortgage then it would be strong evidence.

We were sold a very similar product in 1992 and received redress without any arguments. We had nothing in writing to say that we would receive this or that amount but it must be assumed that the figure would be in line with the mortgage that it was bought to repay.

The fact it was similar doesnt matter. Most endowment redress payments are made because the documentation has gone missing or is not up to the required standard. You can have two people working for the same company. One follows the process correctly and puts all the correct warnings in and looks after the documentation. The other rushes it, leaves risk warnings out and then chucks the documents in a cupboard which get lost over time.

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I took out an endowment with SL (sold via Halifax ) in 1991 .
The endowment was for £16625 ,mature date 2016 .
current value Feb 2009 = £5,703.83 .
Do I have any grounds for a claim .

Nothing there suggests grounds for complaint. You should know if you have grounds for complaint or not. So, we should ask you if you think you have grounds for complaint and if so, what are they?

LatiChris

Many years ago I joined a one-man-band financial advisor to sell for him. He was an appointed representative of Scottish Amicable. Scot Am staff trained me on their products and, although I was told we had to tell clients that the endowment might not do as well as projected, I was always assured by the trainers that the policies would always exceed the mortgage value and more than likely pay a good bonus on top.
Of course, when you worked within the business you wrote-up your own policies and signed-off the questionnaire as 'not requiring advice'. I did this to cover my own interest only mortgage. I should have received commission but, as with other policies I sold, I received nothing from the FA and left this line of 'work' after only a brief time.

I was turned-down by the new owners of my endowment, The Pru, as having no claim for a mis-sold policy. I didn't explain my personal background though and wonder if I should have.

Has anyone on here heard of people within the industry having claims upheld? I know I was told to explain the possible downside, but that downside was never treated as a real threat - just something that the FSA put in there to make selling harder. If anything, I was duped more than most end-customers.

Thanks.

mayb_2

I am sure there was a knowledge of volatility at the pithead dunstonh and concerns about it, but unfortunately such information was neither passed to the sales force or to the customer in many instances. I am not sure which review you are referring to but it is unlikely to be a review of the customers concerned in the sales of endowments.

It is all very similar to the subprime market sales that have brought this country to its financial knees. I knew about the problem a long time before the financial institutions stopped selling these or acknowledged that they had no idea who then held the toxic debts incurred in the sales, as they had played pass the parcel with them. I am just a person who is now very interested in the financial markets through being missold two endowment policies. If I was aware - as you know we discussed this more than once on this forum dunstonh - there is absolutely no excuse for the finance industry itself, or the government, to pretend they were not.

I know also from my own experience, that there are no lengths some companies would not go to, to cover up the fact that their finance products were failing. I am quite sure that pencilpot was not aware of concern or volatility in the product, which was purchased in good faith.

dunstonh

as anyone on here heard of people within the industry having claims upheld?

Virtually all get rejected. Usually because a) you cant complain against yourself or b) it was done on direct offer/execution only terms

I know I was told to explain the possible downside, but that downside was never treated as a real threat - just something that the FSA put in there to make selling harder.

You knew the risks but chose to ignore them. That isnt the fault of anyone else.

LatiChris

Thanks dunstonh. I thought as much but don't totally agree with the reasoning (predictably).
I was hardly a financial professional but just out of work at that time, dragged through the minimum training and released on the poor public. You know how certain companies worked within your industry back then (15 years ago). The minimum the assurance company expected was for people like me to sign-up themselves and their family and friends, with a small number able to grow within the role. Neither long-term suitability nor client care seemed paramount to the company in my experience.
That said, I understand what you're saying and thank you for taking the time to reply.