Act now on mis-sold endowments: new article

mitchy66

Thanks Crazy Saver

Who would we write to again, as we gave copies of the correspondence we had to the FOS when we went to them but they still went with M&G?

We are out of time to appeal to them, would they look again?

Do companies normally send out more than one 'red letter' do you know?

Sorry to bombard you with questions!

Mitchy66

mikeywills

Hi all, I have posted once before when I knew little about the situation but will try again as I am a little better informed.
My PIL took out an endowment policy on the 4th of May 1988, for 20 years, with the Black Horse, through Lloyds.
I have a comparison sheet from them prior to taking out the policy, showing the difference between endowment and repayment, it clearly shows a suggestion that there would be a surplus over and above the secured mortgage, if they were to take the endowment route.
As I have said previously my PIL are not savvy with money and have always taken advise from their bank with regards to the best option for them. The assistant bank manager posted the comparison with a letter which are stapled together inviting them back in for a chat.
I have read through the policy document which they received when taking out the mortgage, which stated that they should receive a review on the 10 year anniversary of the policy. The first review they had was in December 2000, at 12 and 1/2 years. This showed that at that time the policy was unlikely to payout based on the average figure, but if they were to achieve an 8% growth it would be fine. They decided to let it ride and see how it panned out.
They received another review on the 1st December 2003, which was their red letter document saying that there was a high risk that the document would not pay out.
It is at this point they took action and cashed in the policy and changed it to a repayment mortgage also with the lloydstsb.
Now the crux of the possible misselling approach as far as I see it is, my PIL do not remember ever having a fact find done on them, being told where the fund they were paying into would be kept. How high a risk an endowment can be, or an overall cost comparison of a endowment against a repayment. The cost comparison they have just compares the monthly totals showing the endowment to be £3 cheaper per month, but not how much interest woul dbe paid over the full term.
In addition to this when they received their 2003 letter it did not state anything about time barring or the potential of it, so I can therefore assume that they cannot have been time barred to make a claim.
Do the reasons for making a claim, stand up?, sorry for this being so long, but all help appreciated and thanked in advance.

dunstonh

I have a comparison sheet from them prior to taking out the policy, showing the difference between endowment and repayment, it clearly shows a suggestion that there would be a surplus over and above the secured mortgage, if they were to take the endowment route.

The fact it suggests a surplus is fine. There is a good chance it could end in surplus still. This sheet works against you as if confirms that both endowment and repayment options were discussed and compared.

The first review they had was in December 2000, at 12 and 1/2 years. This showed that at that time the policy was unlikely to payout based on the average figure, but if they were to achieve an 8% growth it would be fine. They decided to let it ride and see how it panned out.

Probably a good decision as the old BHL funds are not too bad for an endowment plan and some have never failed to exceed 8% since launch.

They received another review on the 1st December 2003, which was their red letter document saying that there was a high risk that the document would not pay out. It is at this point they took action and cashed in the policy

Shame as 2003-2006 would have seen a near doubling of the value of the endowment in that period.

Now the crux of the possible misselling approach as far as I see it is, my PIL do not remember ever having a fact find done on them, being told where the fund they were paying into would be kept.

I started my career as a BHL adviser and can tell you that there would have been a facfind. The documentation process required the factfind to be sent with the application to Chatham (the old BHL office). They wouldnt allow issue of the policy without the factfind. BHL factfinds were also signed by the clients and contained a number of risk warnings on them.

How high a risk an endowment can be, or an overall cost comparison of a endowment against a repayment.

You have already mentioned that they did have a comparison sheet and it was issued prior to sign up. There was a comparative quote sheet as well that could be issued. I used to attach a copy to the file but cannot recall if that was a mandatory or not.

The cost comparison they have just compares the monthly totals showing the endowment to be £3 cheaper per month, but not how much interest woul dbe paid over the full term.

So they did get a cost comparison?

There is no requirement for the comparison to show total interest. That would have been on the mortgage offer. It has nothing to do with a repayment vs endowment case.

In addition to this when they received their 2003 letter it did not state anything about time barring or the potential of it, so I can therefore assume that they cannot have been time barred to make a claim.

They can still be time barred if the correct procedures have been followed.

Do the reasons for making a claim, stand up?, sorry for this being so long, but all help appreciated and thanked in advance.

Honestly? No they do not. Your parents have a cost comparison. They also have an endowment vs repayment comparison. That clearly indicates that that both cost and pros/cons of options was disclosed. If both of those are held on the client file, it would be strong evidence for BHL to decline the claim. That said, they would have to have them on file and whilst the BHL advisers paperwork was stored quite well, the Lloyds advisers (BHL operated with two salesforces out of the branches) paperwork was generally poorly stored.

mikeywills

dunstonh wrote:

The fact it suggests a surplus is fine. There is a good chance it could end in surplus still. This sheet works against you as if confirms that both endowment and repayment options were discussed and compared.

Ok

Probably a good decision as the old BHL funds are not too bad for an endowment plan and some have never failed to exceed 8% since launch.



Shame as 2003-2006 would have seen a near doubling of the value of the endowment in that period.

I won't tell them that. The figure when taken out was £7136, and the target was £15000. So it was well shy of the desired total.

I started my career as a BHL adviser and can tell you that there would have been a facfind. The documentation process required the factfind to be sent with the application to Chatham (the old BHL office). They wouldnt allow issue of the policy without the factfind. BHL factfinds were also signed by the clients and contained a number of risk warnings on them.

Ok, if we send a letter they should be able to produce that fact find then?, If they had signed this factfind would they not have had a copy?

You have already mentioned that they did have a comparison sheet and it was issued prior to sign up. There was a comparative quote sheet as well that could be issued. I used to attach a copy to the file but cannot recall if that was a mandatory or not.

The comparison sent was for £15,000 over 15 years, they actually went for 20 years, and another sheet was not done.

So they did get a cost comparison?

Not exactly

There is no requirement for the comparison to show total interest. That would have been on the mortgage offer. It has nothing to do with a repayment vs endowment case.

Surely if you just do a comparison on monthly costs, its like APR and misleading against the total true costs. I have seen a copy of the mortgage offer, and it does not mention or show any comparisons, or true cost they had 0.5% reduction for the first year, then the interest only section followed standard rate for remainder. I have many letters stating new monthly figure and when it woul dbe taken out.

They can still be time barred if the correct procedures have been followed.

Is it true that Lloyds to date have not time barred?
Honestly? No they do not. Your parents have a cost comparison. They also have an endowment vs repayment comparison. That clearly indicates that that both cost and pros/cons of options was disclosed. If both of those are held on the client file, it would be strong evidence for BHL to decline the claim. That said, they would have to have them on file and whilst the BHL advisers paperwork was stored quite well, the Lloyds advisers (BHL operated with two salesforces out of the branches) paperwork was generally poorly stored.

It was a small branch, they initially dealt with the assistant manager, and then the branch manager.

Thanks dunstonh, although I do not necessarily like some of your answers, I would rather be told by you than when I approach Lloyds

dunstonh

Ok, if we send a letter they should be able to produce that fact find then?, If they had signed this factfind would they not have had a copy?

It wasnt a mandatory requirement to issue copies back then.

The comparison sent was for £15,000 over 15 years, they actually went for 20 years, and another sheet was not done.

Doesnt really need to be. Over 20 years the endowment was actually likely to be even cheaper (although in the scheme of things we are talking no more than a pound or two pm). The idea of these was to confirm that both options had been discussed and considered.

Surely if you just do a comparison on monthly costs, its like APR and misleading against the total true costs. I have seen a copy of the mortgage offer, and it does not mention or show any comparisons, or true cost they had 0.5% reduction for the first year, then the interest only section followed standard rate for remainder. I have many letters stating new monthly figure and when it woul dbe taken out.

We are talking 1988 here. Rules and requirements have changed a lot since then. You also have to remember that the mortgage was one thing, the endowment was another. The endowment comparion was usually based on a single interest rate over the term and not specific to any deal. Later versions did allow deals to be input but that detail wouldnt result in a claim being upheld.

It was a small branch, they initially dealt with the assistant manager, and then the branch manager.

That probably means that it was a Lloyds adviser then rather than a Black Horse adviser. Copy documents were kept in branch rather than down at Chatham and it is possible that the documents have been poorly treated. They certainly were in the branches I worked in over the years. If they cannot provide the documentation to support the recommendation, it invariably results in complaint being upheld. Missing or incomplete documenation actually accounts for quite a significant number of complaints being upheld.

mikeywills

Thanks dunstonh for your quick responses

dunstonh wrote:

It wasnt a mandatory requirement to issue copies back then.

Although they are not money savvy they do not throw anything out, their own files include every bank statement from their marriage. If they had been given a copy I guarantee it would have been there. So there is a chance it is not in the file either?

Doesnt really need to be. Over 20 years the endowment was actually likely to be even cheaper (although in the scheme of things we are talking no more than a pound or two pm). The idea of these was to confirm that both options had been discussed and considered.

To be honest with you I thought their premiums seemed very low, it was £34.66 per month. Which I think falls in line with the lower end 4% of the spectrum when calculating returns, not taking commissions into the equation, which was 1 16th of 1% per month.



We are talking 1988 here. Rules and requirements have changed a lot since then. You also have to remember that the mortgage was one thing, the endowment was another. The endowment comparion was usually based on a single interest rate over the term and not specific to any deal. Later versions did allow deals to be input but that detail wouldnt result in a claim being upheld.



That probably means that it was a Lloyds adviser then rather than a Black Horse adviser. Copy documents were kept in branch rather than down at Chatham and it is possible that the documents have been poorly treated. They certainly were in the branches I worked in over the years. If they cannot provide the documentation to support the recommendation, it invariably results in complaint being upheld. Missing or incomplete documenation actually accounts for quite a significant number of complaints being upheld.

This is what I thought, or hoped might be the case, that the change over of service providers during the term may actually be to the benefit of them when making a claim. Can you just put in a claim for being missold without specifying any grounds just requesting a copy of your endowment file.

dunstonh

Although they are not money savvy they do not throw anything out, their own files include every bank statement from their marriage. If they had been given a copy I guarantee it would have been there. So there is a chance it is not in the file either?

Impossible to say. A good file will have it. A bad one may not. There is no way to tell until LTSB come back with their response.

To be honest with you I thought their premiums seemed very low, it was £34.66 per month. Which I think falls in line with the lower end 4% of the spectrum when calculating returns, not taking commissions into the equation, which was 1 16th of 1% per month.

There were three target growth rates available for the adviser to use. Premiums were set on that. However, a 20 year endowment for 15k target wouldnt have a large premium. The only BHL endowment I can think of currently is one that cost £78pm for a £44k target over 25 years and that one is above track currently although was showing red warnings a few years back. They were not too badly priced to be honest.

This is what I thought, or hoped might be the case, that the change over of service providers during the term may actually be to the benefit of them when making a claim. Can you just put in a claim for being missold without specifying any grounds just requesting a copy of your endowment file.

1 - I was a black horse adviser who used to be a Lloyds member of staff. The position was on par with branch manager and as we worked in the branches there was no way a consumer could tell which category of adviser they were seeing. The fact they saw two people probably means one was the manager handling mortgages, the other handling the endowment. So, dont read anything in to that. The file could either be at branch or at chatham (or moved to some warehouse in the interim).

2 - The changeover from BHL to LTSB Life and then Scot Widows isnt going to have any impact. It may say Scot Widows on the tin but it isnt proper Scot Widows. It is the LTSB version of Scot Widows. A change of logo wouldnt help you.

3 - you have no legal right to request a copy of your file (well you can request but they can refuse). Data protection does not apply here.

4 - The complaint needs a reason. They will respond to the specific points raised. Although if they do find something else in the process which doesnt look right, they will take that into account. However, you cant just say you want to complain but give no reason.

At the end of the day, there appears to be some evidence which would support the sale of the endowment as being valid and correct. Whether they have that evidence and it is sufficient with the rest, we cannot tell. If they do have it, then it works in their favour. If they dont have it, then it works in your parents favour. Only way to tell is complain but i suggest you dont go into this with a high expecation.

Knowing what BHL required, if the adviser met those requirements, they could safely reject the complaint. However, I also know that the requirements were not always met and some advisers had a poor record on documentation.

mikeywills

Thanks dunstonh, I have already forewarned them to expect the worst, and to think of it a shot in the dark really.
We can but try as they say, we have many regrets in life most of them of the things that we could have done but chose not to.
Cheers

mayb_2

Mickeywills - I thought I had posted a reply to this thread but as I can't see it here I will try again and apologise if it appears twice!

I may be missing something here but surely if your parents did not get told that there was a risk involved, when taking out an endowment mortgage, that the mortgage may not be paid off at the end of the term, they have a basis for a claim of misselling. If there is no paperwork giving information about the risk involved and no record kept of their attitude to risk at the time etc I would have thought they had a good chance of a claim against the company involved. The fact that they were given a comparison of costs between a repayment mortgage and an endowment mortgage doesn't prove that any risks were explained to them does it.

Have you looked at the Which site - they have been running a campaign against missold endowments for many years now and have helped many people receive compensation. They have a letter generator which takes you through the complaint process by asking questions regarding the purchase of your policy and then generates a letter based on your replies.

It worked for us and what have you got to lose? Good luck!

dunstonh

I may be missing something here but surely if your parents did not get told that there was a risk involved, when taking out an endowment mortgage, that the mortgage may not be paid off at the end of the term, they have a basis for a claim of misselling.

Mickeywills has confirmed that they were issued with an endowment/repayment comparison document.

Have you looked at the Which site - they have been running a campaign against missold endowments for many years now and have helped many people receive compensation. They have a letter generator which takes you through the complaint process by asking questions regarding the purchase of your policy and then generates a letter based on your replies.

Funnily enough, not any use against the Endowments that they used to recommend over the years and those that bought on that basis dont get a penny. Thats Which? for you though.

It worked for us and what have you got to lose?

Thats the problem with a compensation culture.