Act now on mis-sold endowments: new article

mayb_2

:mad: You are scaring me now dunstonh. Pearl sounds like the CIS all over again.

I don't know why people such as yourselves have such faith in the Ombudsman and the FSA. They are letting you down as much as people like me.

The FSA was supposed to strenghthen the regulations on what had been a very poorly regulated financial services industry. The results of their attempting to protect that industry from the consequences of its past, has left both the consumer and anyone trying to act with integrity within the financial services industry out in the cold. If companies can get away with the type of thing that the CIS and Pearl are doing and nobody is attempting to stop them everyone loses out.

Confidence is zilch - everyone knows that redress doesn't cover the problems experienced by those with a large mortgage shortfalls, and ignoring the plight of pension holders and savings plan refugees is just driving everyone away.

If those who have been coerced into cashing in viable endowments and sticking with rubbish pensions and savings plans eventually come to grief - who really benefits? Poverty in old age is going to help no one. If pensioners can't spend money because they haven't got any and they are going to be forming a large part of the population in the future all businesses will eventually suffer.

It would be better to make all of the finance companies put their money where their mouths were. If these companies fail then so be it - that is just. Those companies who acted correctly and played the game by fair rules will survive to play again. Confidence would be strong in them and people would be prepared to back them sure in the knowledge of being protected by a strong and fair regulator.

By the By dunstonh I received an apology yesterday from the FSA for not sending me a written reply to my request for information under the Freedom of Information Act. I have been told the letter went in the post yesterday - not here yet but I wait with bated breath.

kidtechnical

Hi there, I just wanted to share my experience. I had suspected I had been mis-sold & urged on many occasions to look into it, but never quite found the time! I forgot all about it until last month. I visisted this site looking for info on Life Assurance policies and saw a bit about endowment policies, it mentioned that if I was single and or had no dependents at the time the endowment was sold then I may have been mis-sold. This described me perfectly. I bought my first property when I was 20, single with no dependants. I vividly remember the woman saying "you'll need the life cover because if you die the flat will be lost" and I though "so?!" I never even got round to writing a will because I didn't really care what happened when I died! When my fixed rate ran out in 2005 I contacted a branch (abbey btw) to discuss the matter & was told that as I was young I shouldn't really worry about it. I'm a student at present & if I just hold off until I qualify (2008) then I can change mortgage & keep the endowment or cash it in... I realised that was rubbish advice at the time, but wasn't clued up to fight the fight at the time... instead months later (I'm so demotivated about financial stuff I don't understand!) I penned a letter, simply saying I felt I'd been mis-sold because 1/I had no dependents 2/I was single 3/I had death in service with my employer that would have paid out enough to buy the house had my next of kin wanted to keep it. I told them that I received notification that there would be a shortfall 1 yr after I took the policy, but never contacted them because, having chosen the fixed rate option due to a tight budget, I was in no position to buy another endowment (which would no doubt generate the same letter 1 yr on and where would it end! I have received warnings about the likelyhood of my endowment not paying off my mortgage each year, the last one said there was a high risk of it).
When Abbey received my letter, they sent me a questionnaire that I was to fill out & return. Thankfully, I have bank statements dating back to 6 months after my mortgage commenced and had kept all correspondence from the Abbey, so I was able to fill the questionnaire out in 20 mins & sent copies of all correspondence. 2 days after I posted the stuff off a man from Abbey resolutions called to tell me they'd received it & it would be looked at & a response received within 3 days. 2 days later I got a letter saying the process would take a little longer & 3 days after that (yesterday) I got a letter saying that my complaint would be upheld & I was due compensation.

How happy am I?

Anyway, I'm not posting to gloat, I'm posting to let anyone out there who is considering complaining & is putting it off like I did to just bite the bullet. Your initial complaint need not be detailed, just a simple "I'd like to complain please" is all the info THEY need then THEY will give you d

mayb_2

:T That is great news and I think it is good to hear the success stories. I had no problem claiming for my missold endowment mortgage either and I do think some people are put off by the idea of a long drawn out battle and going to the Ombudsman etc. It doesn't have to be like that. especially if you have got written evidence to support your claim.

I think the problems arise more often when people were promised a large sum of money after paying off the mortgage. Without evidence of the sum being promised there is nothing they can do even through the Ombudsman.

Don't spend it all on Christmas!

heather8

Apologies first, if this has already been asked, but I have tried to search on L&G and get no hits.

We bought a PEP L&G flexiable mortgage plan in August 1997, to pay off our new loan of 54,000. This is now an ISA

Are we able to try and make a claim for mis-selling on this type of product? At the time the risks of the stockmarket were not discussed with us, or our feelings of risk. We were in our
zt early 30's at the time and also had a old fashioned endowment. We have since made a successfull claim on this product.

I was looking at the paper work, and L&G have given us a timescale for mis-selling. I didn't think that we could make a claim, as this is not an endowment policy, now I am not sure.

We are currently spending £132.00 per month to buy units and cover for my husbands critical life insurance.


The policy currently has a projected shortfall of around 10,700. We have a covered this by switching part of our mortgage onto repayment of around 11,000.

Help please, sorry to sound so dumb, I'm better over on the tesco site!

Thanks in advance.

dunstonh

Are you saying L&G sold the product or was it one of the banks attached to L&G?

As it happens, the PEP/ISA was a much better product than the endowment and I (and some of my clients) still use this method very successfully. I know other IFAs that have clients in similar arrangements.

The policy currently has a projected shortfall of around 10,700. We have a covered this by switching part of our mortgage onto repayment of around 11,000.

Considering the short time its been in force and the stockmarket crash in 2001/2 it is no surprise the projections are low at this time. However, recent performance on your funds (last 3-4 years) would show the PEP/ISA performing at a rate around double that used on the projection and over the long term, providing its 25 years or more, you should find yourself back in surplus. IIRC, they these L&G mortgage linked ISAs used 7% as a target growth rate which is fine.

You could improve the situation a little by transferring the ISA to a fund supermarket and arranging discounted terms (either through a discount IFA or online). That would allow you to get access to much better funds, a wider spread and reduce the charges. In other words, increase the potential for a larger maturity.

You can make a complaint against the advising firm if you wish but I recall seeing this sort of documentation on PEP/ISA mortgages and risk was documented quite clearly and one of the projection figures did indicate a shortfall. If the suitability report written at the time confirms the risk was discussed then the complaint is likely to be rejected. If there is no mention of risk then the complaint is likely to be upheld.

However, as it stands, you do not have an £10,700 shortfall. You have an example shortfall if that particular rate of growth is acheived every year until maturity. It doesnt work like that in real life though. If you give us the name of your investment fund(s) I will post the performance figures so you can see what I mean.

mayb_2

Is there no way dunstonh of people being told by the companies holding their investment what the real situation is regarding this, as well as the usual example projections they have to use to satisfy the FSA?

It makes no sense to leave people thinking their product is not performing when in fact at the time it is on target. It is also totally unfair when they are putting you on a time limit to complain and you have no idea of the best action to take cos nobody will part with the facts.

Should companies not offer alternative investments if they can see that the one operating at the time is not going to come up with the goods or leaves the investor exposed to unneccessary risk of a shortfall? Are 'investors' expected to be able to check the performance of the funds themselves and work it out. If they have to pay someone to do it for them this reduces its real return by those charges.

If mortgage companies bring in new and better deals then they have to offer these to their existing customers now - why does this not work for investments?

I do have to point out that the company we had our endowment mortgage with, persuaded us to pay more money each month as they would be able to overcome the projected shortfall this way - and then the shortfall was even worse a year later. So we are back to the same question - how do you know who to trust and where the true situation lies.

dunstonh

Is there no way dunstonh of people being told by the companies holding their investment what the real situation is regarding this, as well as the usual example projections they have to use to satisfy the FSA?

If you start offering opinion and comment, you fall into the role of the adviser. Most of these companies no longer have advisers so cant do that. So, they stick to the FSA requirements and will tell you to go to an IFA if you need advice.

Should companies not offer alternative investments if they can see that the one operating at the time is not going to come up with the goods or leaves the investor exposed to unneccessary risk of a shortfall?

A number already do but some cant afford to and others only operated a with profits fund so there are no alternatives.

If mortgage companies bring in new and better deals then they have to offer these to their existing customers now - why does this not work for investments?

You are comparing modern mortgages against legacy investments. Modern investments are very flexible but old ones were not. Just as old mortgages were never that flexible either.

I do have to point out that the company we had our endowment mortgage with, persuaded us to pay more money each month as they would be able to overcome the projected shortfall this way - and then the shortfall was even worse a year later. So we are back to the same question - how do you know who to trust and where the true situation lies.

All endowment companies should have done that. As the mortgage interest rates dropped by hundreds of pounds a month, the endomwents should have increased to compensate for some of the difference. We wouldnt have the problems as much now if it had occured.

mayb_2

Thanks for that dunstonh - I used the example of my mortgage to show that the firms predictions for their own future performance was woefully off line So it is not possible to trust these every time - paid more money and vastly increased the shortfall - we felt this mortgage was missold to us twice on false predictions.

I have not found any reason to trust my money (not that there is any) to any sort of fund at all following all of the posts on here. At least if you get as much cash back as you can and you use it to pay off parts of your mortgage you know that that bit is paid and nobody can mess with it. Then a straight repayment deal on best terms is your only real option for dealing with the rest of it.

Do you not agree that any sort of investment fund could go wrong again before pay day and that there is not a way of avoiding that possibility? Its a bit like gambling only use what you can afford to lose!

Crazy_Saver

Originally posted by mayb
So we are back to the same question - how do you know who to trust and where the true situation lies.

Hi mayb

"Dejavu"

I don't think we will ever get the answer we are really looking for. I have to be honest and say that the only people I really trust when it comes to advice, are the people who give their help and expertise on these forums expecting absolutely nothing in return.

Although it isn't always good news that they give me, it is always fair and it has helped me to make informed decisions when it comes to my finances.

Although I am still skint, at the moment I feel that I am gaining control.

I'll feel even more in control when I eventually hear from the FOS regarding my endowment.

Keep up the good fight:beer:

mayb_2

Hi Crazy Saver - I do hope you get the answer you are looking for from the Ombudsman. My own experience left me shocked and horrified at the partisan attitude displayed by them. However, that was not a mortgage endowment so hopefully you will not have the same treatment and there have been many, many successes reported here.

I agree with you about posting on this site. The advice is not always what you want to hear and I must say I don't think it is always accurate either but at least it is free and I can have my say too. It has helped show me the way things work out there and make my decisions based on information I would not normally have access to. My own claim may have had more success if I had undertood what I was up against before I started. C'est la vie!

I have everthing crossed for you. You will post the result here wont you?