Act now on mis-sold endowments: new article

vinno65

dunstonh wrote:

You may have noticed that it only gets mentioned on the companies that have a good enough investment fund to build up a terminal bonus. CIS is an awful with profits fund. It was never a good investment.
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Hi Dunston, long time no post, but I couldn't let this one go!
Why on earth then did IFA's advise people to invest in the CIS with profits??

Regards Vinno

P.S. some interesting stuff on endowments in todays Mail

ayrbear1

dunstonh wrote:

Not unless you have it in writing that you will get £10,000.

It was never going to make £10,000. It would have only made 10k if the whole £5200 you paid in was invested on the first day. I think you would be lucky gettting £5600 on a 1996 plan.

Thanks for your help. I could do with a cash boost just now so what would be a reasonable figure to cash in 1 year early?

vinno65

dunstonh wrote:

Endowments are typically cheaper than repayment mortgages. It was very often the case for people choosing endowment over repayment. Although short memories seem to forget that..

Tsk, Tsk, Dunston, Endowments were the cheaper option back in their heyday when interest rates were high but not so when they are low. Another reason for their "cheapness" was the low premiums set by some companies to specifically to make them more attractive and easier to sell to the mug punters!!(but also as we now realise a massive gamble relying on very high returns)
Why wouldn't someone plump for an endowment if they were told that not only would it pay off the mortgage but give you a tax free lump sum and it's cheaper. Without the risks being explained to you, you'd be a fool not to!

And don't tell me about the benevolent financial services industry that just wanted to help the poor public onto the property ladder. Endowments have always been a heads we win tails you lose product for the industry!

regards Vinno

dunstonh

Why on earth then did IFA's advise people to invest in the CIS with profits fund??

They didnt. CIS with profits endowments were available through the CIS salesforce only. Salesforce advisers can only sell the products their company offer.

Lindyloo_2

Hi all, my first post today although been receiving money tips for a long time. I have used the information on this site and went to FSCS about my missold endownment. After scraping together as much information as I could I have been told by them that although the endowment WAS taken out within the time frame to claim it has been missold the actual advice was given to me just before this time frame and so I cannot claim. Obviously very upsetting news. I know it is not about shortfalls but mine is due to shortfall by nearly £40,000 and my sister's was due to be about a £3,000 shortfall and she received just over £1,000. I was so elated when I realised I was in the time frame and am now wondering if there is any way round what the FSCS have said to me. I would welcome any advice, comments or help any of you can offer please. Thankyou

vinno65

dunstonh wrote:

They didnt. CIS with profits endowments were available through the CIS salesforce only. Salesforce advisers can only sell the products their company offer.

I appreciate that the CIS salesforce would only sell their own companies products, but was everyone else barred from selling them?

regards Vinno

vinno65

dunstonh wrote:

Two sides to every story. Most endowments were taken out because they cost £10-£15pm less than repayment mortgages. Back in those days, that was a lot of money and when you had MIRAS (and double MIRAS for a while) it was a very attractive reason to go with endowments. These things seem to be forgotten.

Duntsonh, again I don't think people have forgotten that endowments were cheaper than repayments "back in those days" but they were designed to be cheaper. This was an attractive selling point. Most people when told of the advantages of endowments over repayment would deem it foolish and a waste of money to take out a repayment.

However when the risks inherent with an endowment are explained to a cust this changes. I firmly believe that most people would not gamble their house
on the stock market for the sake of saving a few pounds each month, indeed in most cases I would suggest that most would have been happy to pay the extra for the peace of mind of knowing that so long as they kept up the repayments the house would eventually be theirs.

regards Vinno

vinno65

dunstonh wrote:

Consumer greed was a big driver as well. The potential for a lump sum at the end was what did it for many as well as the lower costs. Had they been on track for a surplus, do you think they would be complaining now?.

Not greed, common sense. This is exactly why I went for an endowment. However it wasn't explained to me that it wasn't gauranteed, neither was it explained that the endowment wasn't even guaranteed to pay the mortgage off, if it had been I wouldn't have touched it with a you know what!

dunstonh wrote:

Just look at how many people are going in for mortgaged buy to lets. Thats a far riskier transaction than an endowment mortgage but they are still doing it. I wonder how many of these people have made endowment complaints saying they didn't want to take risks with their mortgage. Yet they are doing just that now..

I don't know the numbers but it can't be anywhere near the number of people actually sold endowments on their primary property. Also on what basis do you say that buy to let is far more risky than an endowment? Finally with the collapse of pension schemes, Equitable Life and endowments all presided over by the financial services industry, buy to let looks a far less risky gamble. I wish I had the money to try!

dunstonh wrote:

Its very easy to blame and accuse those that sold them back then but its not all one sided. Endowments had never failed to pay a surplus, they were cheaper than repayment (helped by MIRAS to some degree) and you still had organisations like the consumers association and the media recommending them. Many people were walking through the doors and asking for them. They didn't need to be sold. You had parents coming in saying that they wanted their FTB children to have an endowment as theirs paid out loads..

These would be execution only sales then, no redress due.

dunstonh wrote:

To try and put all the blame at one door is naive. The consumer has to take some blame for it as well and indications are that they haven't learnt the lesson when you look at the numbers going into mortgaged buy to lets.

Poor old naive punter stupid you for believing what you were told!

regards Vinno

mayb_2

Thanks for all of that vinno 65.

ayrbear1
I will warn you now that I have tried to pursue a complaint of misselling over an endowment not attached to a mortgage. Although I had enough evidence to show that the policy was missold by mortgage endowment standards, because it was not attached to a mortgage and there was not a written sum projected for the end of the policy we failed to get anything from the company or the Ombudsman. Our endowment was to pay £30,000 according to the salesmen and actually would have achieved less than the amount we paid into it in premiums. (under £10,000) So we lost money in reality.

However, the Ombudsman could find no fault with the company even though they had not kept in touch with us about this policy or given us any figures for many years and we only found out about the problem by accident.

The FSA felt that they may have failed us in this respect but would not sanction them for it -publicly at least.

We have not completely finished with this complaint yet but it has taken over two years to get this far. We cannot afford to take them to court as it is too big for the small claims court. They and the company you are dealing with are as safe as houses unless you have that magic figure in writing. I do so hope you have.

mayb_2

By the way the company was - guess who - yes the CIS.