Act now on mis-sold endowments: new article

formby

Many thanks you have put my mind at rest over this issue. i am grateful.

formby

Fullspizz

I'm thinking that I may have a case against the company that sold us our endowment policy.
It was taken out in April 1999, although he spoke about both endowments and repayment mortgages, he kept basically pushing us in the direction of the endowment mortgage.
He kept stating that it would pay off the mortgage and give us a tidy lump sum afterwards. Obviously in the past 6 months I have recieved numerous letters to the opposite effect.
My projected shortfall is for about 8k on a 40k mortgage, this seems like a big drop to me.
I have filled out the complaints letter (just in case there is action I can take)
Is this worth following up?

dunstonh

It was taken out in April 1999, although he spoke about both endowments and repayment mortgages, he kept basically pushing us in the direction of the endowment mortgage.

1999 should see the documentation and disclosure information to a higher standard and the fact you confirm he discussed both indicates the rules were followed (to some degree).

Obviously in the past 6 months I have recieved numerous letters to the opposite effect.
My projected shortfall is for about 8k on a 40k mortgage, this seems like a big drop to me.

Projections mean absolutely nothing here. If it is a unit linked endowment, you could be heading for a good surplus as a stockmarket crash in the early years would be highly beneficial in the long run as those units bought cheap will be worth the most at the end. However, the units bought at the start before the crash would drop down in the short term.

Even if the endowment was performing at a level that could provide a 10% surplus, you would still get shortfall illustrations. These illustrations are not an indication of what you will get but an indication of what you could get with an average rate of return of 4,6 &8%. These things dont work like that so you end up with useless projections a lot of the time.

I have filled out the complaints letter (just in case there is action I can take)
Is this worth following up?

Its up to you. I would expect there to be more documentation with a 99 case to support the adviser and it is clear that both methods were discussed. So, I wouldnt hold out too much hope but we dont know what documentation you were given and what the advising company holds on file.

Fullspizz

Ok, many thanks for the answers.
I guess I'll leave it then.

dunstonh

At minimum, you should investigate the investment funds you are in. If its a bog standard default managed fund, then you should check to see if the provider offers alternative funds (they usually do on unit linked endowments). A spread of the alternatives invested in a way to match your risk profile should offer better potential over the long term than the "jack of all trades, master of none" managed fund.

Fullspizz

IIRC, I have 50% in a "with profits" fund and the other 50% in a "unit linked" fund.
After checking up, this is supposed to be the best option for a person who likes little or no risk

dunstonh

Fullspizz wrote:

IIRC, I have 50% in a "with profits" fund and the other 50% in a "unit linked" fund.
After checking up, this is supposed to be the best option for a person who likes little or no risk

It will be a unitised with profits and should allow fund transfers. They will have a range of funds available which, when utilised, should give a better investment spread and offer potentially better returns than the standard fund and the with profits fund.

If its a Norwich Union endowment, then you should qualify for the 2008 orphan funds dispersal and NU have an endowment promise of upto £5000. That isnt included in the projected illustrations. NU also have some pretty good funds. (im only guessing at NU as they are one of only a few that allow a mix between with profits and unit linked. After saying all that, its probably with one of the others )

Fullspizz

It was originally with Scottish Amicable, althought eh Pru have taken it over this year.

mayb_2

The basis of a misselling claim is whether you were told that you were taking a risk by buying an endowment mortgage that the returns would not pay off your mortgage. Would you have gone ahead with this mortgage if you knew of the risk? If the answer is no do you wish to continue risking your money now? Has your attitude to risk changed? Speaking about both types of mortgage, and investigating your attitude to risk and warning you of those attached to an endowment mortgage, are different things altogether.

Although these investments may be paying out at the present time and it sounds as if you are not sure of that, there must still be an element of risk involved in maintaining an Endowment mortgage. Can anyone promise you that this will pay out the required amount at the end of the term? Supposing the market crashes again in the future. I am assuming that you took out a 25 year mortgage here and it has a long time to run.

Perhaps that is the question you should be asking now when deciding whether to pursue a claim for misselling. If these are time barred and things do not go well in the future you will not be able to claim for a missold endowment then. Even if you do not wish to claim for misselling maybe you should consider changing to a repayment mortgage. You could maintain the endowment as well if it looks good but at least you would know you are paying your mortgage off.

dunstonh

http://www.ifadu.co.uk/downloads/Endowments-AH.pdf

Take a read of that article if you have a Pru/Scot Am endowment.