Act now on mis-sold endowments: new article

Spikeyorks

Hi There

I was talking to my new partner about her recent endowment statement. She was moaning that her £23k policy was only due to pay our around £12k and, in her mind, she just connected this with the general banking crisis etc. I then told her about endowment mis-selling and asked her how much compensation she had had in the past. It was obvious from her reaction that she had no idea what I was talking about.

Looking back through the dates it was seem that the high point of endowment mis-selling occurred at the time her husband walked out and they were divorced. Since then she has had her annual statement (her recent one has got all the code red warnings written over the top) but just assumed that this was a comment on performance rather than a suggestion to sue the company.

My partner say quite clearly that she and her ex-husband were originally offered a choice of endowment or repayment mortgages back in 1990 and that they were steered towards endowment as the costs were broadly the same but the endowment would (a) pay off the mortgage and (b) leave a small lump sum afterwards. She says that it was said that the endowment might not produce the lump sum but it was never said that it might only produce half the funds needed to pay the mortgage.

I have explained to her the principal of time-barring and the fact that this was a very public matter in the past but she genuinely says that until this year she knew nothing about it.

Her question is therefore quite simple. Is it worth making a claim as, in her eyes, the policy wasn't fit for purpose and the explanation given at the time of purchase didn't say you could end up with 50% of your mortgage not covered? Is she simply time barred whatever she says? Finally is there any scope under the sex-discrimination act because, and she isn't proud of this, all the financial decisions were made by the "men" and her priority was to bring up her children and try and keep a roof over her head.

As she said it would have been nice if her bank had helped her with this at the time rather than her wondering now if she is going to be thousands of pounds out of pocket.

Any comments will be appreciated. The endowment is with Standard Life.

Thanks

David

dunstonh

Looking back through the dates it was seem that the high point of endowment mis-selling occurred at the time her husband walked out and they were divorced. Since then she has had her annual statement (her recent one has got all the code red warnings written over the top) but just assumed that this was a comment on performance rather than a suggestion to sue the company.

It isnt a suggestion to sue the company. Indeed, legal action on endowments was very rare, even during the period when endowment complaints were high.

My partner say quite clearly that she and her ex-husband were originally offered a choice of endowment or repayment mortgages back in 1990 and that they were steered towards endowment as the costs were broadly the same but the endowment would (a) pay off the mortgage and (b) leave a small lump sum afterwards. She says that it was said that the endowment might not produce the lump sum but it was never said that it might only produce half the funds needed to pay the mortgage.

So no grounds for complaint there.

I have explained to her the principal of time-barring and the fact that this was a very public matter in the past but she genuinely says that until this year she knew nothing about it.

The regulator took view, as it also has with PPI, that media coverage itself was not enough grounds to bar a complaint. To allow the time bar to be activated, the plan had to be in a potential shortfall position and the person notified of a high risk of shortfall. Most high risk shortfall letters went out around 2001-2005. The time bar then became effective three years later.

Her question is therefore quite simple. Is it worth making a claim as, in her eyes, the policy wasn't fit for purpose and the explanation given at the time of purchase didn't say you could end up with 50% of your mortgage not covered?

She has said she knew there was a risk of shortfall and that a comparison of repayment vs endowment took place. So, it would be hard to argue your point on that basis.

Is she simply time barred whatever she says?

If the policy is time barred then the argument does not matter. It fails before it gets to that stage.

Finally is there any scope under the sex-discrimination act because, and she isn't proud of this, all the financial decisions were made by the "men" and her priority was to bring up her children and try and keep a roof over her head.

None whatsoever. She had joint and equal rights to the policy.

As she said it would have been nice if her bank had helped her with this at the time rather than her wondering now if she is going to be thousands of pounds out of pocket.

Banks are not there to help people like that unless the person approaches them. They wont know what the individual needs unless the individual tells them.

The endowment is with Standard Life.

Are you sure the Std Life endowment is more than 50% off target? They are typically in shortfall but not normally that far off and not if you include the mortgage promise value as well.

Sirlaughalot

dunstonh wrote: »

It isnt a suggestion to sue the company. Indeed, legal action on endowments was very rare, even during the period when endowment complaints were high.



So no grounds for complaint there.



The regulator took view, as it also has with PPI, that media coverage itself was not enough grounds to bar a complaint. To allow the time bar to be activated, the plan had to be in a potential shortfall position and the person notified of a high risk of shortfall. Most high risk shortfall letters went out around 2001-2005. The time bar then became effective three years later.



She has said she knew there was a risk of shortfall and that a comparison of repayment vs endowment took place. So, it would be hard to argue your point on that basis.



If the policy is time barred then the argument does not matter. It fails before it gets to that stage.



None whatsoever. She had joint and equal rights to the policy.



Banks are not there to help people like that unless the person approaches them. They wont know what the individual needs unless the individual tells them.



Are you sure the Std Life endowment is more than 50% off target? They are typically in shortfall but not normally that far off and not if you include the mortgage promise value as well.

My policy after 15 years is worth 10% less than the premiums i have paid into it!
Paid in just under £24000 the pot at last annual assesment stands at £21360!
My property has almost trebled in value during that time, my compny pension is on target to meet it`s maturity and my own shares portfolio has easily outperformed cash over 12 years together with the cash we have invested in our Tessa/Isa accounts we will easily meet the shortfall in our endowment policy.
Just wish that us amateur investers were as good at our job as those over paid fund managers/investment guru`s who over the 15 year period have witnessed record property prices, record stock market values and record commodity prices to name just a few area`s of diverse investment have managed to be outperformed by cash.
A very different senario to the salesman(directed to us by Abbey National/Santader) who showed us graphs of how endowments always outperform cash long term and quoted us returns of 7.5% and 12% annual returns which he said would easily pay off the mortgage and leave us enough cash to buy a caravan on the coast and an around the world cruise.


Some hope but as the the fund manager says endowments are a low term investment!

My advise to all MSE`s is to beware of any commision based investment policies offered to you by the banks.

SL

dunstonh

My policy after 15 years is worth 10% less than the premiums i have paid into it!

A 25 year policy on track would break even around year 10-12. With the volatility over the last 5 years, it being behind that in the short term would not be unexpected.

My property has almost trebled in value during that time, my compny pension is on target to meet it`s maturity and my own shares portfolio has easily outperformed cash over 12 years together with the cash we have invested in our Tessa/Isa accounts we will easily meet the shortfall in our endowment policy.

Yes, it is somewhat ironic that the things which conspired to create the credit boom which pushed house prices did so much damage to endowments.

Just wish that us amateur investers were as good at our job as those over paid fund managers/investment guru`s who over the 15 year period have witnessed record property prices, record stock market values and record commodity prices to name just a few area`s of diverse investment have managed to be outperformed by cash.

You are not comparing like for like though. A single premium invested back then would have exceeded cash. Problem is that for the majority of the payment period you have had, the investments would have been more expensive than they are today. Plus, you have had the cost of charges and life assurance to factor in. Most of which are done in the early years.

A very different senario to the salesman(directed to us by Abbey National/Santader) who showed us graphs of how endowments always outperform cash long term and quoted us returns of 7.5% and 12% annual returns which he said would easily pay off the mortgage and leave us enough cash to buy a caravan on the coast and an around the world cruise.

Until around 2001, no endowment had ever fallen short and most had gone into double digit annual returns for decades.

My advise to all MSE`s is to beware of any commision based investment policies offered to you by the banks.

No such thing exists anymore.

Sirlaughalot

dunstonh wrote: »

A 25 year policy on track would break even around year 10-12. With the volatility over the last 5 years, it being behind that in the short term would not be unexpected.



Yes, it is somewhat ironic that the things which conspired to create the credit boom which pushed house prices did so much damage to endowments.



You are not comparing like for like though. A single premium invested back then would have exceeded cash. Problem is that for the majority of the payment period you have had, the investments would have been more expensive than they are today. Plus, you have had the cost of charges and life assurance to factor in. Most of which are done in the early years.



Until around 2001, no endowment had ever fallen short and most had gone into double digit annual returns for decades.



No such thing exists anymore.

Hi there,

The stock market is littered with periods of volatility from the great depression to the oil crisis in the 70`s, recessions 81. 91, 2001, 9/11 etc., etc., To cherry pick the recent financial crisis as some kind of excuse is unconvincing, any long term investment should have adequate investment diversity not only to meet fund managers huge salaries/bonus but provide an substantial return on maturity compared to cash for policy holders.

SL

Spikeyorks

Are you sure the Std Life endowment is more than 50% off target? They are typically in shortfall but not normally that far off and not if you include the mortgage promise value as well.

I didn't actually say that the policy was more than 50% adrift. For reference the 2013 statement says "Target Amount - £23,000 with a 5.50% growth estimate of what the plan will pay out - £14,300".

It seems quite simple to me. If the salesman, in 1990, had even only hinted that an endowment for £23,000 might only actually produce £14,300 then no one would have bought them.

Banks are not there to help people like that unless the person approaches them. They wont know what the individual needs unless the individual tells them.

Now that really does read like an "industry" answer. Firstly it implies that the "expert" has no duty of care to it's customer (even though it already holds all of the facts). Secondly are we saying that if the "individual" were to approach them now, which actually is within the 3 years that my new partner first became aware of the problem, then they would listen and correct the mistake? (After all are we really saying that there are people who don't want their shortfalls made up?).

I do now find this quite fascinating because this personal example has highlighted to me that there must still be people out there losing thousands of pounds simply because they didn't understand what was happening in the financial world. Really my new partner has done nothing wrong other than trust a salesman, trust her ex-husband and trust a large financial organisation to look after her.

Do they really all have to let her down?

Sirlaughalot

Spikeyorks wrote: »

I didn't actually say that the policy was more than 50% adrift. For reference the 2013 statement says "Target Amount - £23,000 with a 5.50% growth estimate of what the plan will pay out - £14,300".

It seems quite simple to me. If the salesman, in 1990, had even only hinted that an endowment for £23,000 might only actually produce £14,300 then no one would have bought them.


Now that really does read like an "industry" answer. Firstly it implies that the "expert" has no duty of care to it's customer (even though it already holds all of the facts). Secondly are we saying that if the "individual" were to approach them now, which actually is within the 3 years that my new partner first became aware of the problem, then they would listen and correct the mistake? (After all are we really saying that there are people who don't want their shortfalls made up?).

I do now find this quite fascinating because this personal example has highlighted to me that there must still be people out there losing thousands of pounds simply because they didn't understand what was happening in the financial world. Really my new partner has done nothing wrong other than trust a salesman, trust her ex-husband and trust a large financial organisation to look after her.

Do they really all have to let her down?

Hi Spikeworks,
Tell her to go directly to the financial ombudsman service they will arbitrate between the two of you. They will get the ball rolling on your behalf with a standard letter they send out.

Standard life will have 8 weeks to respond .

For a bit of inspiration look at France63 here.

https://forums.moneysavingexpert.com/discussion/4586489

dunstonh

The stock market is littered with periods of volatility from the great depression to the oil crisis in the 70`s, recessions 81. 91, 2001, 9/11 etc., etc., To cherry pick the recent financial crisis as some kind of excuse is unconvincing, any long term investment should have adequate investment diversity not only to meet fund managers huge salaries/bonus but provide an substantial return on maturity compared to cash for policy holders.

You look at your periods upto 2001, you will see they were typically followed by relatively short term boom/bust periods and higher inflation with relatively quick recoveries. Investment returns had been declining decade on decade when you look back with hindsight.

The problem with 2001 was that it came off an extended growth period without any real volatility for 13 years and had one of the biggest market crashes (which didnt happen overnight but over a period) for generations. The UK stockmarket still has not recovered to that point prior to that.

Diversity is down to you. Not the fund manager unless you invest in a multi-asset fund. So, that is not an issue.

dunstonh

Now that really does read like an "industry" answer. Firstly it implies that the "expert" has no duty of care to it's customer (even though it already holds all of the facts).

First of all, the bank would not have employed an expert. They employed a sales rep. That sales rep was employed to sell a product. Sale took place and the contract with the sales rep ended. Advice is split into transactional and servicing. Banks have only ever worked on transactional basis.

It seems quite simple to me. If the salesman, in 1990, had even only hinted that an endowment for £23,000 might only actually produce £14,300 then no one would have bought them.

The sales reps were not experts. They were sales reps. No qualifications, read a manual over a week and off you go. That was effectively the base minimum back then. At that point, no endowment had ever failed. The information supplied in the early 90s did mention risks, you admit that was the case as well. Problem is that despite those risks, people were still buying. Had this site existed in the early 90s then it would have an endowment best buy period. The consumers association had a best buy on endowments (ironically standard life were their frequent best buy and if you followed their advice you would have bought on execution only and not been able to complain). The media was still pro endowment as well. We can look back and see where it went wrong and why but you dont have that benefit at the time.

The one good thing is that had the economic cycle and events remained where the endowments hit target and paid surplus then we all would have been worse off. So, despite the endowment being in shortfall, she is better off.

Secondly are we saying that if the "individual" were to approach them now, which actually is within the 3 years that my new partner first became aware of the problem, then they would listen and correct the mistake? (After all are we really saying that there are people who don't want their shortfalls made up?).

You get three years from first being notified of a high risk of a shortfall. Typically these were issued around 2001-2004. These are followed up with warnings of the timebar date in each annual statement. Standard Life activates the time bar. Not the bank. Most Standard Life plans are timebarred.

I do now find this quite fascinating because this personal example has highlighted to me that there must still be people out there losing thousands of pounds simply because they didn't understand what was happening in the financial world. Really my new partner has done nothing wrong other than trust a salesman, trust her ex-husband and trust a large financial organisation to look after her.

Most endowments were not mis-sold. Even those that complained only found a minority, albeit a significant minority, were mis-sold. It is unfortunate that she took no interest in her affairs but that is not the problem of the insurer. They issued statements containing warnings and reminders that she would have until x date to make a complaint about mis-sale.

Do they really all have to let her down?

Bottom line is that if Standard Life say it is timebarred then it is.

Tell her to go directly to the financial ombudsman service they will arbitrate between the two of you. They will get the ball rolling on your behalf with a standard letter they send out.

Standard life will have 8 weeks to respond .

For a bit of inspiration look at France63 here.

You cannot circumvent the complaints process by going to the FOS first. All the FOS will do is forward a handwritten note taken third party onto the Standard Life. Standard Life will then forward it on to the selling company unless they were the selling company.

What needs to be done is a phone call to Standard Life to find if the policy is timebarred from complaint or not. if it is, then it is game over. If it is not, then she is free to make a complaint. Standard Life will also tell her if it is they that carry the liability or the bank.

The example of Frances63 does not apply as it was it was a pre-regulation policy and own brand. The banks volunteered to review pre-regulation cases on their own products. That is a different scenario to the one here.

Sirlaughalot

dunstonh wrote: »

First of all, the bank would not have employed an expert. They employed a sales rep. That sales rep was employed to sell a product. Sale took place and the contract with the sales rep ended. Advice is split into transactional and servicing. Banks have only ever worked on transactional basis.



The sales reps were not experts. They were sales reps. No qualifications, read a manual over a week and off you go. That was effectively the base minimum back then. At that point, no endowment had ever failed. The information supplied in the early 90s did mention risks, you admit that was the case as well. Problem is that despite those risks, people were still buying. Had this site existed in the early 90s then it would have an endowment best buy period. The consumers association had a best buy on endowments (ironically standard life were their frequent best buy and if you followed their advice you would have bought on execution only and not been able to complain). The media was still pro endowment as well. We can look back and see where it went wrong and why but you dont have that benefit at the time.

The one good thing is that had the economic cycle and events remained where the endowments hit target and paid surplus then we all would have been worse off. So, despite the endowment being in shortfall, she is better off.



You get three years from first being notified of a high risk of a shortfall. Typically these were issued around 2001-2004. These are followed up with warnings of the timebar date in each annual statement. Standard Life activates the time bar. Not the bank. Most Standard Life plans are timebarred.



Most endowments were not mis-sold. Even those that complained only found a minority, albeit a significant minority, were mis-sold. It is unfortunate that she took no interest in her affairs but that is not the problem of the insurer. They issued statements containing warnings and reminders that she would have until x date to make a complaint about mis-sale.



Bottom line is that if Standard Life say it is timebarred then it is.




You cannot circumvent the complaints process by going to the FOS first. All the FOS will do is forward a handwritten note taken third party onto the Standard Life. Standard Life will then forward it on to the selling company unless they were the selling company.

What needs to be done is a phone call to Standard Life to find if the policy is timebarred from complaint or not. if it is, then it is game over. If it is not, then she is free to make a complaint. Standard Life will also tell her if it is they that carry the liability or the bank.

The example of Frances63 does not apply as it was it was a pre-regulation policy and own brand. The banks volunteered to review pre-regulation cases on their own products. That is a different scenario to the one here.

Yes you can go straight to the FOS in certain cvases i did it that way and claimed back over £6000 in a PPI case just over 2 months ago!