Act now on mis-sold endowments: new article

morris21

Hi
I have been speaking to my dad tonight about his endowment policy as he is due to finish paying for his mortgage in 12 months and should be receiving his endowment policy to clear the last 15k, but told me how he had been conned and was sold an endowment policy as he was told he would be receiving a enough to cover the final balance and have a little left over. He took the policy out in 1991 with guardian ( it was a staff plan). He never realised or understood that he had a chance to try and claim for the mis-sold policy or short fall and it's only through me looking on martins site that any of this has come to light. He does have a letter he received stating that their would be a shortfall, but he also has some original documentation from when he was sold the policy (he is going to dig this out). My question is, is it to late to try and make a claim for him, to help meet his shortfall-any advice would be grateful-thanks

dunstonh

( it was a staff plan).

So, as an employee, he conned himself?

He never realised or understood that he had a chance to try and claim for the mis-sold policy or short fall and it's only through me looking on martins site that any of this has come to light.

Shortfall is not grounds for complaint. Also, as a staff policy, there is a very good chance that he never sought advice. Some cases this does happen but in many the employee chooses to buy it without advice to get a staff discount. As no advice is given on those cases, there is no-one to complain to.

My question is, is it to late to try and make a claim for him, to help meet his shortfall-any advice would be grateful-thanks

Over 3/4 of endowments are timebarred from complaint. Also, the complaint needs to be made to the adviser if he used one. This will be the insurer's advice department but if he didnt use an adviser then he has no-one to complain to.

morris21

Thanks for your help, my dad wasn't involved in insurance or that side of the business he worked in the post room, he received a letter dated 15 October 2010 explaining that his target amount was not likely to be met, by appropriately £1000, depending on the next few years. At the time he spoke to a person at work who was an advisor and he told my dad he wouldn't be entitled to claim because he was on a staff low rate mortgage (preferential rate), should this matter? Also I have looked at the original documents from when the policy was taken out and the policys wording says-
Type of assurance - joint low cost mortgage endowment
Term of assurance - 22years
amount of mortgage cover-£15200 made up by
endowment sum assured - £6400 with profits and
Reinforcement benefit sum assured -£8800 decreasing by £400 per annul over 22years
Acceptance date - 9th September 1991
do you think he should have complained or should I write a letter of complaint on his behalf as he is adamant that at the time he was told he would receive the full 15200 plus extra and there was no mention of any risk?
Thanks again

troutangler

At the very least I would write and complain and see what the company have to say. This would give your father some indication as to how they view his position regarding this matter. If after receiving a reply from the company then he would know where he stood. I am of the belief that regardless of the fact that your father was a company employee the policy should have been fully explained at the point of sale and this does not seem to be the case. Therefore in my eyes the company should do the honorable thing and pay out compensation. I wish you all the best.

dunstonh

Thanks for your help, my dad wasn't involved in insurance or that side of the business he worked in the post room

It depends on how it bought it though. Staff policies are often sold without advice. Doesnt matter what your role is. The payoff is that the commission is rebated into the plan to lower the premium.

At the time he spoke to a person at work who was an advisor and he told my dad he wouldn't be entitled to claim because he was on a staff low rate mortgage (preferential rate), should this matter?

The mortgage itself shouldnt matter but if it was bought without advice (as many staff deals are) then it would matter.

o you think he should have complained or should I write a letter of complaint on his behalf as he is adamant that at the time he was told he would receive the full 15200 plus extra and there was no mention of any risk?

If he bought without advice then its game over. If he bought via an adviser then he can complain assuming he isnt time barred.

I am of the belief that regardless of the fact that your father was a company employee the policy should have been fully explained at the point of sale and this does not seem to be the case.

That isnt the case though. No-one is required to take advice if they do not want to. Usually the choice is to either take advice and get no staff discount or take no advice and get a staff discount. No advice means no-one to complain to.

magpiecottage

dunstonh wrote: »

Usually the choice is to either take advice and get no staff discount or take no advice and get a staff discount. No advice means no-one to complain to.

I am not sure that is correct. I used to advise staff of a different insurer that I worked for in the early 1990s. We always advised staff as LAUTRO had a healthy scepticism of such execution-only business.

However, it is possible that the pay off for an endowment mortgage was eligibility for a mortgage subsidy - which would normally be considered in any redress calculation.

dunstonh

I am not sure that is correct. I used to advise staff of a different insurer that I worked for in the early 1990s. We always advised staff as LAUTRO had a healthy scepticism of such execution-only business.

I used to be a tied agent and the staff were given the choice. If they used the adviser then they didnt get the discount. If they chose to do it execution only then they did. The discount was effectively a nil commision arranged policy.

Different firms probably had different procedures.

magpiecottage

dunstonh wrote: »

I used to be a tied agent and the staff were given the choice. If they used the adviser then they didnt get the discount. If they chose to do it execution only then they did. The discount was effectively a nil commision arranged policy.

Different firms probably had different procedures.

I was paid for my time, by the company, to advise. Commission was used to discount the premium regardless. The company also gave a subsidy on the first £20K endowment cover.

If employees left the subsidy was stopped unless, as in my case, they were made redundant. I still receive my subsidy.

I would also make the point that if an employee of the insurer made a recommendation it is likely that FOS would uphold a complaint, even if the employee was not authorised to do so, if the complainant could show that they were led to believe the employee was acting on the authority of the employer. However, proving it is likely to be difficult.

dunstonh

Should I ask for interest to be added on to the surrender value of the policy and compensation offered?

No.

I am not sure whether we should accept as my husband and I are in real financial difficulty as a result of taking out the endowment.

the method of redress is defined by the FSA. You get exactly what you are entitled to. No more, no less. You are put in the position you would have been had you gone with a repayment mortgage.

magpiecottage

fishing_mad wrote: »

my husband and I are in real financial difficulty as a result of taking out the endowment.

If you mean you are in difficulty because the endowment will leave a shortfall that you cannot meet then the redress will, as the word says, redress that.

If the redress will leave you still in financial difficulty then that will not have been due to choosing the endowment.