legal rights - financial ombudsman

Ian_W

EdInvestor wrote: Really? Did you think that no mutual or insurance company ever went belly up? What about UKPI, failed in 1986, had to be rescued by Friends Provident?

Didn't say that, now did I? But just remind me, Friends Provident, the White Knight resuer were at the time ... a PLC ... or a Mutual? So was UKPI rescued by a PLC because only they were capable of doing so, or by a bigger Mutual which even my very limited knowledge of the subject would suggest wasn't that unusual.

What I did say was specifically about with profits and endowments. So to turn it into a PLC v Mutual argument suggests to me you've not really much ammo to respond on that point. :rolleyes: Never mind.

But do please answer me this, and I genuinely don't know the answer, but you probably will. Are PLC w/p endowment policy holders actually doing so much better than Mutual w/p endowment ones? Certainly they have the potential to, hence the de-mutualisations [+ a lot of people seeking windfalls, no doubt] from the mid 90's onwards.

But are the PLC's actually sharing their profits with w/p policy holders or keeping them for the shareholders who their primary duty [I would have thought] is now to?

EdInvestor

Friends Prov was a mutual at the time. This is not a plc v. mutual matter, it's a question of risk.

Many people who were (mis)sold endowments were not told of the risk that the policy might not pay off the mortgage: many were not told that part of their money would be invested in the stockmarket.Of those that were told about the latter, very few if any were told about the additional single company risk involved in WP that I've explained above. The risk is potentially more serious at mutuals than plcs, but not necessarily - it's hard for instance to see that RSA (an ex plc) policyholders are any better off than those at Equitable (a mutual.)

They are told now about these risks of course, the FSA requires it.Not that anybody much invests in WP products any more.

cratchit

Ian_W wrote:

Ed,

At the time most EP's were "mis-sold" no-one even conceived that "with losses" could happen, it wasn't on anyones radar, so why should people have been made aware of it? Belongs to the same mentality as apologising for our colonial past IMO.

Point that doesn't require hindsight, forsight or second sight which I was making is that WP policies come with a "basic sum assured" and if you read that in plain English, which most WP stuff isn't, it means - this is what you're guaranteed, everything else isn't. It's what we expect, project, hope for but it isn't guaranteed. If it ain't guaranteed why expect compo if it doesn't materialise, no matter how much everyone expected it to?

Thank you for your comment.
The reason why peoiple should be made aware there may be no profits, is precisely as outlined in your comment ie: the standard Policy is not written in plain english and people "consult with advisers" precisely to have these policies explained to them so they can then make an informed choice. If they are never told the policy may not make any profits, then why on earth would they want to purchase it? They could choose to get a more competitively priced package somewhere else(either go with repayment and start a savings account to plan for their old age etc) that did explain exactly what their returns would be. If you are being sold something and told that you will get minimum returns of profits as at the rates of the date of sale (which I was) then I expect this to constitute a legally binding agreement and I expect the Financial Ombudsan to uphold this.

If I pulled out of this agreement I would have been penalised on how much projected "so called profits" Abbey would have lost, so why aren't they penalised for now renaging on this deal? There is no paperwork anywhere stating that I may not get a minimum profit, obviously because they thought rates would increase, I was "assured" the minimum policy would achieve was the rate of the day as a profit, but obviously Abbey promoted these policies with the carrot dangling that the likelihood was much greater profits over the life of the policy. How can an investor make an informed choice if they are being sold a policy without all the relevant consequences being explained to them first?

Everyone knows these policies were sold as "with profits" and it was never explained to consumers there may not be any profits - that's why I expect to get what I was assured I would, - no more and no less. I don't feel this is an unreasonable request and if I was an estate agent that had sold a brand new house under dubious circumstances, I would be held to account, why are the dodgy salesmen selling EP not held accountable too?

cratchit

EdInvestor wrote:

Many people who were (mis)sold endowments were not told of the risk that the policy might not pay off the mortgage: many were not told that part of their money would be invested in the stockmarket .

In response to Ed Investor, I was told that only the high risk big profit endowment policies were invested in the stock market and I did not want to take this risk. I opted for the smaller profit which would give me safe secure returns and I was told that these lower profit policies carried no risk because the money was invested in solid companies - that's why my profits would be lower because I was taking no risk.

EdInvestor

Cratchit

Could you tells us a bit more about the type of endowment policy you have?

Was it a mortgage endowment?When was it sold?

Does it have a "guaranteed sum assured" and annual "declared bonuses"?

Which insurer is the policy with?

cratchit

It was sold March 87 my statement shows it to be a conventional "with-profits" policy No: 1, with declared bonuses, it was purchased from Scottish Amicable.

I can't find much documentation because my husband dealt with it and he's no longer here. Abbey have agreed to re-imburse because the policy was mis-sold, but they are not being made liable for "loss of profits" which is what has aggrieved me. They specifically sold these low, safe policies promising a minimum "profitable return" but apparently, now they are not liable for profit losses.

They have no paperwork stating I was informed the policy may make no profit so surely the onus is on them to uphold this legally binding contract?

silvercar

Abbey have agreed to re-imburse because the policy was mis-sold

The compensation is designed to put you in the situation you would have been in, had you had a repayment mortgage.

You are actually lucky (compared to others in your situation) to get any money because your policy started before 1988 when a lot of regulations came into force.

You cannot take them to court because your policy started more than 15 years ago.

You really have reached the end of the road with this.

EdInvestor

Silvercar is right I'm afraid.

The minimum return was the "guaranteed value" which is the combined total of the guaranteed sum assured and the annual declared bonuses. The "with profits" bit comes in the terminal bonus which is unguaranteed.

It has been agreed that you were missold because the risk that there would be no profits wasn't properly explained to you.And thus you have received compensation putting you back in the position you would have been in, if you hadn't bought it in the first place.That's what is supposed to happen.

So that's it basically.