Act now on mis-sold endowments: new article

andybars

Panther011 wrote:

My provider has upheld my complaint and has offered me compensation that i am very diasppointed with.

I have been offered £900 compensation on an endowmnent of £30K.
The projected shortfall of my endowment is £8700.

Our children highlighted the the problems about our endowmemt last year and told us to make a complaint as they believed from talking to us, that we had been mis-sold our policy.
They also offered to lend us some money to pay off a lump sum of the mortgage as they could see it was causing distress to us.

So we paid off a lump at the same time as seeking compensation.

It appears that because we made this recent lumpsum payment, the provider gets to use this in there calculation of compensation.
We all thought that we were acting responsibly but in hinsight this may have been a silly thing to do.

As, If we had not have made this payment our compenstion would have been signicantly higher !

I have been told by the ombudsman that this is within the regulations set down by the FSA.

This is surely not FAIR ! had we increased our mortgage by the same amount. I am sure that would not have been taken into consideration.

After all, we were seeking compensation from the mis-selling of the endowment. We did not expect the compensation to cover all the projected shortfall but it feels we are getting a raw deal from all sides.

FIRSTLY - If there is anyone out there that is in a similar position, and is thinking of making a lumpsum payment off there mortgage whilst waiting for a decision on compensation - Definately think twice or seek some advice !

SECONDLY - Is there anyone out there, who has experierenced the same problem and overcome it. OR anyone who can offer any advice ??

Any advice or help would be greatly appreciated.

Many thanks.

If you can convince the provider that you only made the lumpsum payment as a result of a shortfall letter (i.e if you had correctly had a repayment mortgage which was progressing as expected you would not have made the payment) then under the FSA guidelines this should not be taken into account. I would also clarify to them that you had borrowed the money elsewhere, i.e your outstanding balance remained the same - this is the same as if you had switched lender which must still be included in the calculation

(This is a point which most firms ignore so you may need to go to the ombudsman and make this point to the ombudsman). As a caveat, I should add that the calculations involved are complex and there are examples where making the lump sum payment will be beneficial in the calculation i.e because your regular monthly payments are now paying a higher proportion of capital than interest, compensation is higher using the lump sum. The provider will also probably say that if they re-calculate and the figure is lower they will pay only the lower figure. Whilst a figure excluding the lump sum will be fairer, it will not necessarily be higher.

andy

dunstonh

I don't know if I have a leg to stand on as it was an execution only endowment and do not know who to write to about it. I hope someone can help me.

Execution only means you didnt get advice. You probably took the endowment on discounted terms as well to reflect that.

If you did complain, the response back would be that no advice was sought or given and that the transaction was done on execution only basis.

Staff members generally have less protection than a consumer.

Kaz&Mike

Thank you Dunstonh, that was my understanding of the situation, which was why we paid £5,000 of the mortgage a couple of years ago.

But I have one of these companies that apply on your behalf keep contacting me and say I might have a case, which put doubt in my mind.

Now older and wiser

defender_of_the_weak

Kaz & Mike

I run a company that complains about endowments (amongst other things) and dunston is quite right in his assessment of your chances,

You could try a hopeful punt in case they have lost some of the paperwork but don't book a holiday on the chances of winning.

The company that is contacting you either knows nothing about endowments because they are a contracted cold calling firm or will ask for some money along the way which they are sure you will receive back once your case is succesful. getting the money back when they fail however can be a lot trickier.

Kaz&Mike

defender of the weak, the company take no money up front, but take 25% if they manage to get some redress. My niece worked for them for a while and says she does know of them getting money back for people. I thought it might be worth a shot as I have nothing to loose (apart from 25%)

honesty_2

Had an endowment mortgage with midland bank (now hsbc) dating back to 1988.The endowment part was with scottish widows.The policy was to pay out £46000.Scottish widows informend me that a short fall of approx £16000 was likely.I took the bank to small claims court with all paper work to show they had guaranteed the mortgage.Bank settled out of court paying all shortfall plus compensation of £2200.If you have an endowment policy shortfall do not be afraid to challenge your lender.

dunstonh

honesty wrote:

Had an endowment mortgage with midland bank (now hsbc) dating back to 1988.The endowment part was with scottish widows.The policy was to pay out £46000.Scottish widows informend me that a short fall of approx £16000 was likely.I took the bank to small claims court with all paper work to show they had guaranteed the mortgage.Bank settled out of court paying all shortfall plus compensation of £2200.If you have an endowment policy shortfall do not be afraid to challenge your lender.

That is most unusual and doesnt match what you would expect. For example, its only a paper shortfall. It doesnt mean it will be that figure. So to be given all shortfall plus a further compensation doesnt seem right.

Plus you say you were going to the small claims court. The limit is £5000 for that yet you say they paid you over £18,000.

Can you clarify some of these points?

madkingsoup

Well the FSCS got back to us about our claim. They can't help us because although the company that advised is closed, it was a partnership and at least one of the partners is still alive and solvent, so we have to find him and sue him personally. The FSCS can only help now if it turns out he is financially incapable. Great. So now we have to find the old git somehow and I bet that won't be easy or cheap.

So there's a lesson there that nobody ever told us - beware partnerships. The partners are liable until they die or become insolvent, even if the company itself doesn't exist.

dunstonh

So there's a lesson there that nobody ever told us - beware partnerships. The partners are liable until they die or become insolvent, even if the company itself doesn't exist.

Actually, you stand more chance from a sole trader or partnership because they have a lifetime liability. A limited company can close down and leave no assets.

madkingsoup

Trouble is, I've got to find the guy now. If I'd known this before I wouldn't have wasted valuable limitation period time waiting for the FSCS to get back to me. (I think I may be too late now actually.)