Act now on mis-sold endowments: new article

dunstonh

I have been offered compensation for mis-selling on my endowment of about £1000. Should I accept

Your choice is to accept £1000 or nil.

The offer said that it was designed to put me in a similar position to where I would have been, it clearly doesn't.

It does to the point it was no longer in use for the mortgage. Any decisions you made at that point onwards were your doing. Not the result of the original adviser.

garyrjb

dunstonh wrote: »

Your choice is to accept £1000 or nil.



It does to the point it was no longer in use for the mortgage. Any decisions you made at that point onwards were your doing. Not the result of the original adviser.

Thanks for your help dunstonh.

I think this is all very strange as I was initially told that they were not going to review my case and then out of the blue they wrote and told me they would now review the case and I returned the forms by return post and they then made the offer in two days.

I just think the compensation is very low although my wife is over the moon and thinks I am being greedy. I believe the difference between the to different mortgages was around £2500

I have got all my mortgage statements from this time is there any way to calculate it more accurately than their formula.

Finally have you heard of anyone who has taken it further, if so to whom, and got more compensation.

dunstonh

I think this is all very strange as I was initially told that they were not going to review my case and then out of the blue they wrote and told me they would now review the case and I returned the forms by return post and they then made the offer in two days.

Not unusual. They may have initially rejected it as it was sold pre-regulation but then someone else decided it was within their remit. Or the original person rejecting it used the wrong criteria and someone checking their work noticed it was wrong. Sometimes that happens quite quickly after a claim. Other times it can take a couple of years.

I just think the compensation is very low

Its not compensation. Its redress. The average redress payment is £2200. So you are below average but then you say you got rid at the early part of the 2000s. Endowments didnt start to fall short until then. So, the amount you were financially worse off may not have been that great.

I have got all my mortgage statements from this time is there any way to calculate it more accurately than their formula.

Their formula is set by the FSA. Its called mortgage fundamentals. You can pay a site online to do the calculation for you to verify its correct.

Finally have you heard of anyone who has taken it further, if so to whom, and got more compensation.

If they have done the calculation correctly then they wont pay any more and dont have to. If you took it to the FOS then they would just make sure the clalculation used was correct. However, that could add another 6 months whilst you wait for it to be reviewed.

shiralee_2

Hi,

I was sold an endownment Standard Life Policy, sold by Abbey in 1987, for a 25 year policy. The policy is scheduled to pay just Half of 55000, and will only mature after my retirement at 60. I think this is not right as it should have been clarified that it will mature after retirement, and now its only paying 1/2 anyway. Is this good enough to claim, as I dont have much paperwork from the meetings or the illustration?

dunstonh

and will only mature after my retirement at 60. I think this is not right as it should have been clarified that it will mature after retirement

You mean you couldnt tell when you were going to retire?

Also, what makes you think your retirement age is 60? In 2012 (when the policy matures), the minimum state retirement age is 61 years and 8 months. The FSA generally allow rounding of up to 1 year as well as you cant get the maturity date exact.

It is quite acceptable for mortgages to go into retirement if there is a good reason. In 1987, it was common for people to use the lower monthly payments excuse with a view that inflation would erode the amount of the debt by the time they get to the end.

In the past, complaints tended to be upheld more if they went into retirement. However, abuse of that reason by claims companies and try-it-on complaints has seen far fewer endowment complaints upheld for that reason. Indeed, many firms will now ask for evidence from you that you can afford to retire at the age you say. Especially if it is before state retirement age.

now its only paying 1/2 anyway. Is this good enough to claim,

investment returns (or lack of) are not grounds for complaint under FSA rules.

Most of Standard Life's endowments are now time barred. So you are probably too late to complain anyway.

Standard Life's position
Standard Life is to apply time-bars for mis-selling complaints on mortgage endowment policies for which it was responsible for the original advice, i.e. sales through tied representatives (mainly Halifax and Bank of Scotland) and our own Direct Sales Force. We wrote to our customers from February 2005 onwards and informed them of a specific date by which a complaint must be lodged if they feel they may have a legitimate reason to do so. For the majority of customers, this was May 2006. Reminders were issued from June 2006.

mayb_2

Well dunstonh you certainly overdid the cold water on that one!

Whether you can retire at 60 depends on your date of birth not whether you feel like it or can afford it. I can retire at 64 following the changes but have friends who can still retire at 60 and one has done so very recently. State pension is then paid at the time you are scheduled to retire.

At the time the endowment policy was sold the retirement age for women was 60 (it was usual for the sales people to ask you what age you would like to retire at and tell you that the policy would be set up to give you a lump sum at that age).

So the age you will retire now there have been changes is irrelevant if the policy was set up to continue beyond your then date of retirement it was missold. I cannot believe that the companies are entitled to make you prove you can afford to retire when a complaint is made that the policy is not going to pay off the mortgage!! How bizarre is that. Do you have to prove that you need your state pension too now? Whatever next will these companies do to try to avoid their culpability I wonder.

The public opinion of the finance sector is at an all time low - and they only have themselves to blame. Do they really think they will gain brownie points by acting in such churlish and unethical ways I wonder.

If you think you were missold your policy shiralee (you did not understand that this would still be being paid into your retirement, and you did not understand there was a risk involved that your mortgage would not be paid off at the end of term) then you should make a claim and if it is turned down on any of the basis listed by dunstonh then I would take it to the Ombudsman.

dunstonh

Whether you can retire at 60 depends on your date of birth not whether you feel like it or can afford it. I can retire at 64 following the changes but have friends who can still retire at 60 and one has done so very recently. State pension is then paid at the time you are scheduled to retire.

You can have whatever retirement date you like. However, due to try-it-on claims, the post retirement excuse is looked at more closely than it used to be. If you say you want to retire at 60 but your state retirement age is 62 and the endowment finishes at 61 then its not likely to be upheld unless you can prove your retirement provision is going to kick in at 60. And then you would have to show the mortgage would not have been affordable.

If its way past retirement, then that's a different matter. They have just put some logic and common sense in to it now.

At the time the endowment policy was sold the retirement age for women was 60 (it was usual for the sales people to ask you what age you would like to retire at and tell you that the policy would be set up to give you a lump sum at that age).

Doesnt matter. It was more common in the past to also set them up to go past retirement to keep monthly payments down and watch inflation erode the value of the mortgage and then use any pension lump sums or savings to clear the mortgage quicker at the end.

You cant just say "past retirement age" and get away with it like you used to. Now its looked at closer.

Whatever next will these companies do to try to avoid their culpability I wonder.

Whatever next will consumers do to try it on I wonder. No side can make a claim that they are angelic.

The public opinion of the finance sector is at an all time low - and they only have themselves to blame. Do they really think they will gain brownie points by acting in such churlish and unethical ways I wonder.

That has nothing to do with individual complaints. You shouldnt just pay out because it would be popular to do so.

sterling01

This may be slightly off topic, and if so I am sorry. Just over 10 years ago I had a friend who worked for Pearl Assurance. I wanted to save some money so that my then 3 year old son would have a small nest egg by the time he reached 18. We hoped that it would return him £4000+ so that he could at least buy a car or help with further education. I asked my friend if Pearl had a suitable savings plan and he advised a 15 year endowment policy. We took out this policy on his advice. My wife and I split up a number of years ago and only recently she updated Pearl with my details. Two days ago I received a statement from Pearl showing that the guaranteed future value on maturity would be £3177. On maturity I will have invested £3600 with Pearl. I would have been as well putting the money in a box under the bed. I called to find out if there was some sort of a mistake and discovered that the policy was actually an endowment policy on the life of my ex-wife and I. I did not ask for any sort of life cover. I have sufficient life cover on with my mortgage and also from my company.

So I have a few questions.

1. Was I mis-sold, should I be claiming and if so, how do I do it.

2. Should I cash in the policy and find a 4 to 5 year investment, and if so, which one?

dunstonh

So I have a few questions.

1. Was I mis-sold, should I be claiming and if so, how do I do it.

No. The product was right. Pearl operated a tied salesforce. So, you only had access to what they had to offer. Their remit is to offer you the best product from their limited product range. They had endowments and PEPs. PEPs had a minimum monthly payment of £100 and the endowments (saver plan as it was called) had a minimum of £10 (that rose to £20 and £50 in later years depending on when you took it out).

Also, PEPs cant be placed in trust or name a child as beneficiary whereas the Saver Plan can.

The problem is that Pearl were bought by AMP who asset stripped them and badly managed their UK financial services. AMP then went back to Australia and demerged Pearl with Hendersons. Hendersons didnt want Pearl and sold it to a venture capital company (whose aim is to maximise profits for the shareholders). That venture capital company borrowed a lot of money and its left Pearl weak. So, their bonuses have been awful.

Plus, we have had the worst 10 year period for investments for generations. Timing was awful

2. Should I cash in the policy and find a 4 to 5 year investment, and if so, which one?

Depends on the cost of surrender vs the benefits of keeping.

It should be noted that your plan is not a mortgage endowment but a savings endowment. They have different structures and the mis-sale issues with mortgage ones dont apply to savings ones.

Victors_Bruvver

I may have left this too late but I thought I would ask for some advice here please.

In December 1987 we decided to move house. As we already had a £27,455 endowment mortgage for 25 years taken out 5 years earlier with Scottish Amicable (now Prudential) and the new mortgage was going to be £43,000 we were told by an independent consultant that a top up of £15,545 on the existing endowment would be all right. Unfortunately a couple of months later we discovered to our horror that the consultant had screwed up this ‘top up’ and didn’t actually set it up and we had to asked another company to help sort it out for us. The result was Scot Am would or could not top up the existing policy or for that matter extend it and we therefore ended up with another policy for £15,545 that would now mature in December 2012 with profits.

This week the ‘red’ letter from Prudential warning us of the high risk of a shortfall when it matures in 2012. The projected shortfall % figures they give are 4%, 6% & 8% with corresponding cash amounts of £4,045, £3,345 and £2,545. IE: the policy, depending on what the actual growth will be, is going to be worth either £11,500, £12,200 or worst case scenario £13,000.

The original policy, by the way, matured in 2007 paid off just over the £27,455 plus profits of just under £10,300 in October that year which by that time we had moved on to a smaller property where we did not need a mortgage.

It still leaves me with the ‘problem’ of this remaining policy and what do with it. Do I make claim for mis-selling, and to whom, or do I do any of the following, A) Keep up the £23.00 a month premium so that we at least have life assurance up to the date of when the policy matures? Cash it in and take the current valuation of £9,500 or C) Make it paid up and save the £920 that I am going to pay Scot Am over the next 39 months?