Act now on mis-sold endowments: new article

WoodySenior

I have not had the time to read through all of the posts on this subject and therefore there maybe an answer here somewhere to the following question:
Why was there a time limit set?
I was miss-sold an endowment by Lloyds Bank in 1983, which they admitted in writing was miss-sold, and the two policies covering the loan just scraped over the loan amount, but without the huge surplus originally promised, in 2008 by their salesman.
I feel that I have been robbed by the financial services industry as why should the date of the miss-selling have any bearing on this issue? As far as I am concerned a miss-selling is just that and the time of the action should have no bearing on the compensationpayable or the lac of same.

dunstonh

Why was there a time limit set?

To stop people hedging their bets by sticking with endowments until maturity then deciding to complain at that point. i.e. using the benefit of hindsight. Plus, timebars exist in law and are commonly used in many areas.

I was miss-sold an endowment by Lloyds Bank in 1983

That would be pretty hard as regulation didnt come in until 1988. So, complying with regulations that didnt come in until 5 years later would be some feat.

Chances you are also financially better off than having gone with repayment mortgage. For a period you had MIRAS or even double MIRAS. You also had LAPR (tax relief) on the endowment premums for the whole period and typically endowments were around 10-15% cheaper than repayment mortgages. So, even if you ended up with small shortfall, you would still almost certainly have been better off.

I feel that I have been robbed by the financial services industry as why should the date of the miss-selling have any bearing on this issue?

Why should you expect rules that didnt exist to be followed?

As far as I am concerned a miss-selling is just that and the time of the action should have no bearing on the compensationpayable or the lac of same.

The law doesnt agree with you.

mayb_2

Woody you are one of many, many people missold endowment policies and not able to do anything about it. The excess you were promised by the salesman means nothing unless you can produce a document that promised a certain amount would be paid to you at end of term. The time bar is a sort of legal get out of jail free card for the financial industry, to enable them to put a line under the loses they would suffer if they were forced to meet the cost of everyone entitled to claim a missale.

Unfortunately, frequently because of the lack of understanding of the product sold to them, many people do not realise what is happening or understand what they need to do in time to avoid being barred from taking any action. The time bar was introduced once the full scale of the problem was realised by the industry and they sought to protect themselves as more and more people had been alerted to the possibility of making a legitimate claim.

Dunston you miss the point of claiming for a missale - if you are on target then whether or not it was missold you have nothing to gain by complaining - particularly if it is about the pot of gold promised at the end of your endowment rainbow, which acts like the real thing - when you get there you find it doesn't exist.

If your endowment fails at any point you should be able to claim that it was missold to you in order to protect yourself as best you can from the shortfall. If the paperwork shows this not to have been sold in the correct way, with a clear understanding by the purchaser that it may not cover the mortgage let alone produce anything extra, then you should be able to choose to take that up with the company, at any point in the term when it becomes obvious that you will be put at a disadvantage by that fact.

If your endowment actually covered the mortgage then you have actually done better than a lot of people with these type of mortgages did. Those that took their cases to the Ombudsman only got redress - not compensation. This means they were put back into the same financial position as if they had taken out a straightforward repayment mortgage. No account is taken of extra monies promised to the purchaser when the endowment was sold.

Unfortunately you have to kiss that one goodbye as there is nothing to protect you in law. I think we can all see very clearly these days that successive Governments have encouraged this country to be a one trick pony. The financial services industry became just about the only thing we had and, as indsutry was sacrificed to it, it could not be allowed to fail. So we continue to pay vast sums to those who led us astray economically and ethically and the country and the people are much the worse for it.

magpiecottage

mayb wrote: »

The time bar is a sort of legal get out of jail free card for the financial industry, to enable them to put a line under the loses they would suffer if they were forced to meet the cost of everyone entitled to claim a missale.

Incorrect. The time limits were put in by the Limitation Act 1980 (which replaced earlier versions) and applies to everybody EXCEPT the Financial Services industry because the Financial Ombudsman Service and FSA choose to ignore it and apply far less strict guidelines.

Unfortunately, frequently because of the lack of understanding of the product sold to them, many people do not realise what is happening or understand what they need to do in time to avoid being barred from taking any action.

Again incorrect. The FSA forced firms to write and explain to consumers very clearly that they were at risk of a shortfall, what to do if that was the case and the deadline for making a complaint. That would NOT apply in any other industry.

The time bar was introduced once the full scale of the problem was realised by the industry and they sought to protect themselves as more and more people had been alerted to the possibility of making a legitimate claim.

As I say, the time bar already existed. In fact the FSA and FOS took it away and replaced it with a watered down version.

Those that took their cases to the Ombudsman only got redress - not compensation. This means they were put back into the same financial position as if they had taken out a straightforward repayment mortgage. No account is taken of extra monies promised to the purchaser when the endowment was sold.

That is not true. If there is evidence that a provider or its representative promised a particular figure at maturity then FOS can enforce that. However EVIDENCE is seldom there.

mayb_2

As I said magpie a 'legal' get out of jail free card.
The advice I personally received with my first 'warning letter' was to pay more and everything would be all right - I paid more and ended up losing even more money as the product failed further in the following year. This advice came from the provider who I was told to ring to sort this out. I had no issue in claiming my redress for my mortgage one year later, but it did not change the fact that I had made serious financial loses that I am still struggling to overcome before retirement in just a few years time. This is the real world.

Understanding of the product and ins and outs of the financial products bought on 'good advice', does not materialise because you have a letter telling you that you need to do something. People often do not understand the magnitude of the issue they face and may not be in a financial position to do anything about it. They may not be able to write the letters and take the actions that are best for them.

The financial industry has admitted that many of the wrapped up debts they bought into were beyond their understanding - yet the consumer was supposed to know what they were doing in purchasing these endowment policies many years ago, and before there was such a thing as a stock market for the man in the street. Hence the subprime market fiasco that has brought our financial industry into disrepute and this and other countries to their knees.

'watered down' or not the time bar was brought in on these claims to help the FSA to ensure that it complied with one of its remits of the time - which was to protect the financial industry from lack of confidence -. Well they have blown that one over the last few years and people have lost confidence in the FSA itself following the issue of Northern Rock amongst other things!

Perhaps I should have said that no account was taken of the extra monies promised to the purchaser at maturity because this requires a figure put in writing at the time. It is not enough for instance, to have a document that says that as well as paying off your mortgage you can look forward to a lump sum on maturity. This isn't even evidence apparently that you believed that the product would more than cover your mortgage!

I am not disputing your version of the system magpie - just pointing out the realities for those of us caught up in this personal financial crisis in a system not created for our benefit.

dunstonh

I am not disputing your version of the system magpie - just pointing out the realities for those of us caught up in this personal financial crisis in a system not created for our benefit.

It is not created for anyone's benefit. However, if you had to look at the legal position and the one that the FSA imposed on firms, then you have to say that the consumer is favoured as the FSA time bars are more favourable to consumers than the legal time bars.

mayb_2

There is no time bar favourable to consumers and it was not introduced for their benefit - it is a tool to take away the rights of people to make a claim within the life of the product they bought. In what way does that benefit the consumer?

As I have said - even if you bought the product not knowing what you had purchased and what might be the outcome, you may not wish to get rid of it while it is still serving its purpose. It may not be going to provide you with a lump sum as promised but it may pay your mortgage. Claiming usually means you have to convert to a repayment vehicle and this may not be the best for you financially - you will still not be reimbursed the lump sum so both avenues fail to address that problem.

:(Once you find that the product is also not going to pay your mortgage - which could be at any stage in the term, you would have to find a repayment vehicle and may wish to claim the missale at that point. It was still a missale based on the fact you did not know that there was a chance it could fail at the point of purchase. That right has been taken away by the time bar - legally or not it is not a morally right action and is fairly typical of what is wrong with the industry in general. People cannot and will not trust it.:(

We have pensions get out of jail free cards too - you can be told at any point that your pension will pay out less than promised to you when you paid into it - state and private - all quite legal but theft of your rights none the less and morally wrong IMHO.

dunstonh

There is no time bar favourable to consumers and it was not introduced for their benefit - it is a tool to take away the rights of people to make a claim within the life of the product they bought. In what way does that benefit the consumer?

If the standard legal timebar had been used then most people wouldnt have been able to complain.

We have pensions get out of jail free cards too - you can be told at any point that your pension will pay out less than promised to you when you paid into it - state and private - all quite legal but theft of your rights none the less and morally wrong IMHO.

As no-one can promise anything, I don't know what promises you are referring to.

mayb_2

Disingeuous to the last I see Dunstonh.

magpiecottage

mayb wrote: »

As I said magpie a 'legal' get out of jail free card.

The purpose of the long stop is to provide a balance. On the one hand, you have a right to redress if something is wrong. On the other, you have a duty to take reasonable steps to minimise your losses.

Policyholders were sent letters which said very prominently "Red Alert there is a high risk that your policy may not pay out enough to clear your mortgage". When I say "prominent" I mean in bold type in a box, at the start of the letter. It also made very that there was a deadline. The deadline was at least three years after the first "red alert" letter and had to be in a second letter that gave you a mimimum of six months' warning.

The advice I personally received with my first 'warning letter' was to pay more and everything would be all right - I paid more and ended up losing even more money as the product failed further in the following year. This advice came from the provider who I was told to ring to sort this out. I had no issue in claiming my redress for my mortgage one year later, but it did not change the fact that I had made serious financial loses that I am still struggling to overcome before retirement in just a few years time.

If you had taken out a repayment mortgage at outset you would be in the same situation as you are in now anyway because the redress is calculated to put you back into that position.

Understanding of the product and ins and outs of the financial products bought on 'good advice', does not materialise because you have a letter telling you that you need to do something. People often do not understand the magnitude of the issue they face and may not be in a financial position to do anything about it.

What part of "Red Alert" do you think they do not understand?

They may not be able to write the letters and take the actions that are best for them.

You only had to telephone or write and say you were unhappy. Either the insurer would deal with it, pass it on to whoever sold the policy or tell you how to.

The financial industry has admitted that many of the wrapped up debts they bought into were beyond their understanding - yet the consumer was supposed to know what they were doing in purchasing these endowment policies many years ago, and before there was such a thing as a stock market for the man in the street. Hence the subprime market fiasco that has brought our financial industry into disrepute and this and other countries to their knees.

It certainly seems beyond your understanding because endowment misselling and sub prime are completely separate issues affecting different areas of financial services.

'watered down' or not the time bar was brought in on these claims to help the FSA to ensure that it complied with one of its remits of the time - which was to protect the financial industry from lack of confidence -.

The timebars appear in the Limitation Act 1980 (and possibly in predecessor legislation) whereas the Financial Services Authority was incorporated (as "SECURITIES AND INVESTMENTS BOARD LIMITED(THE)") on 7 June 1985, so your views are clearly nonsensical.

Perhaps I should have said that no account was taken of the extra monies promised to the purchaser at maturity because this requires a figure put in writing at the time. It is not enough for instance, to have a document that says that as well as paying off your mortgage you can look forward to a lump sum on maturity. This isn't even evidence apparently that you believed that the product would more than cover your mortgage!

Did it actually say that? Or did it give you three figures, one showing rather more than the mortgage amount, one showing the exact amount and one rather less?