Act now on mis-sold endowments: new article

DibDab_3

We were sold an endowment in 1997 with a guaranteed maturity benefit. However the guarantee was subject to reviews at ten 15 and 20 years. We now know what the review is. We have been asked to fund ALL of the shortfall for the guarantee to continue. What is amazing is that if we pay up now and Clerical Medical lose more of our money in 5 years time they can ask for more cash!

We have complained to the ombudsman but got nowhere as this state of events is documented in the handy 79 page book of rules with the endowment. Yes it is small print and yeas the review and guarantee are split over several sections.

Is there any other recourse of action?

dunstonh

Is there any other recourse of action?

If the advising firm says no and the FOS say no, then you are really looking at the end of the road unless you appeal the FOS decision.

Endowments themselves are not bad advice. It comes down to how it was presented and advised on. If the documentation shows the risk warnings etc (the reason why letter being the key document) then there is little you can do about it. A 79 page book of terms and conditions would not carry any weight in a complaint in the same way the illustrations and key features documents carry little weight. So, there must be something else in the file that supports the recommendation made.

DibDab_3

The main document did show warnings of a shortfall BUT as the whole thing was guaranteed then we thought we were OK. Infact the IFA when this was taken out said this was a no risk policy (not documented anywhere).

I really do have a problem with the way the guarantee works. :mad:

The reply from the adjudicator siad that as the guarantee was not with the IFA but with clerical medical we had no grounds for misselling

Our attitute to rik ws considered "balanced" if that has any bearing on the situation

dunstonh

The main document did show warnings of a shortfall BUT as the whole thing was guaranteed then we thought we were OK. Infact the IFA when this was taken out said this was a no risk policy (not documented anywhere).

There are four truths to what was said. What you said, what he said, what was actually said and then how that is interpreted.

What may or may not have been said can be twisted by either side either as a result of time making the memory poor or just outright porkies. So, documentation is king as that is fact. The two most important are the factfind and the reason why letter (now called suitability letter/report).

Our attitute to rik ws considered "balanced" if that has any bearing on the situation

Which matches the risk of the CM endowment. With profits is balanced risk.

DibDab_3

Thanks for taking the time to look at my ramblings

My main issue is with the rather shoddy guarantee. It is not much use if I have to pay all the shortfall myself (as Clerical Medical have requested).

Is there anywhere I can turn to to complain about what I see are sharp practices.

In this case do I need to have understood all the terms and conditions and small print?

dunstonh

Perhaps you should make a complaint to CM about the guarantee and your view that it isnt one.

I dont think you will get anywhere as it's a different sort of complaint but you may get an explanation out of them.

mayb_2

guarantee - looked up that word in the dictionary and it says formal promise or assurance, giver of guarantee or security, thing serving as a security. Interesting isn't it? The financial world often fails to reflect the real one when it comes to normal interpretation of documents and wording used, sales techniques etc.

Perhaps this hinges on the sentance where the word guarantee is used. If the guarantee was for a maturity value of x amount it is difficult to understand why this does not mean that you would get x amount on maturity. If this depended on you altering the amount you were paying them then they could not surely make the guarantee at all.

Have you thought of asking a Solicitor for advice. Initial half hour of advice used to be free or a set figure when I worked for one - at least you might find out what the 'legal' position would be on this. The FSA have stated that it is not enough to have information in a leaflet etc but they must explain the product in language that can be understood - you should have fully understood the risk you were taking and the product you were purchassing. Perhaps the inclusion of the word guarantee could be seen as deliberately missleading if it was not a true representation of what you were getting. Misselling is all about your understanding of what you were buying and your understanding of investments - purchasing a product you believed to have a guaranteed return is not a sign of wishing to invest in a high risk area after all.

dunstonh

guarantee - looked up that word in the dictionary and it says formal promise or assurance, giver of guarantee or security, thing serving as a security. Interesting isn't it? The financial world often fails to reflect the real one when it comes to normal interpretation of documents and wording used, sales techniques etc.

guarantees with provisos are allowed. I guarantee to do something as long as you do xyz is a guarantee.

You will actually find that the word guarantee is hardly ever used now. Even on Guranteed equity bonds, you tend to find the word guarantee is replaced with other words which have less strength to them. Such as security. Capital guarantee doesnt mean the same as Capital Security.

mayb_2

I do think it would be helpful now dunstonh, as it would have been helpful in the past, if financial papers were written in plain english with no attempt to mis represent (however accidentally) what it is that is being bought and sold.

It is difficult to imagine how consumer confidence would ever be restored whilst companies are still dancing around the truth of what they are getting you to buy. Why not just shout it loud and clear - Invest (not save) with us and you may make lots of money on the other hand you may just lose it all its up to you. Some people will always want to gamble just as some like to bet on the horses. Most of us would not want to gamble with our homes and our pensions however.

dunstonh

I do think it would be helpful now dunstonh, as it would have been helpful in the past, if financial papers were written in plain english with no attempt to mis represent (however accidentally) what it is that is being bought and sold.

It works both ways though. A lot of what is in the text is there because of loopholes found over the years.

A lot of people mix up could with would. You can have two identical paragraphs with just one word difference. Would and Could. It changes the meaning completely but you would (could ) be surprised at how many people say they were told they would get a lump sum when it really says could get a lump sum.

My suitability reports are now around 20 pages. 10 years ago it was 5-10 pages. Most of the pages are no longer why you are doing something but why you are not doing something. Of a 20 page report, only about 5 cover the recommendation. The rest is in there to protect my backside.

If you look at the amount of documentation that is required by the FSA to be issued on these things, you could spend a month reading it. I do believe that the amount of documentation should be reduced at the current levels are stupid. The more you give someone, the less likely they are to read it.

Most of us would not want to gamble with our homes and our pensions however.

That is you. That is not most people.

Every buy to let mortgage someone takes out is gambling with their home. Every income drawdown is gambling with their pension. Every person going self employed is gambling with their home.

Why? because they think they can make more money. Some know the risks and others dont and could underestimating the risk. It's happened before. Its happening now and it will happen again.