Taking endowment complaint to Court

shepherd_2

VERY impressed with this excellent website. Found it after spending hours trawling the internet for help on the massive projected shortfall on my mortgage endowment.

I was sold a Standard Life Low Cost With Profits endowment policy in Feb 1988 by and IFA who has not volunteered to go under the FOS but is still trading under the FSA.

(In brief Mortgage of £50,000 Projected shortfall Feb 2005 on 4% basis £19,000!!).

After deciding against a complaint-handler I used the WHICH? template to raise my complaint to the IFA (unsuitable policy / risks not explained etc.).

The IFA gave a prompt final response: (a) pre-April 1988 so FSA rules do not apply (b) under general law, claims after 15 years of the original transaction are "absolutely barred" under Limitations Act 1980. Therefore complaint is time-barred - but I could contact the FOS for confirmation.

I rang FOS who said for a sale Pre-April 1988 by IFA they could not help. No surprise there.

My question is this: The final stage on the FSA complaints flowchart is going to court. Has anybody got any knowledge / experience in this area or advice on pursuing a claim in the courts - specifically defeating the time-barring by the IFA on pre-1988 sales?

silvercar

If you take someone to court the burden of proof (that there was misselling in this case) rests with you. Have you got proof?

Going to the ombudsman requires the person who sold you the policy to prove there was not misselling; therefore you are more likely to have a cse.

I syumpathise with you, my SL policy was sold to me April 1988 by a limited company that has now been dissolved.

dunstonh

I was sold a Standard Life Low Cost With Profits endowment policy in Feb 1988 by and IFA who has not volunteered to go under the FOS but is still trading under the FSA.

You need to look at this from the advisors point of view. After 1988, the ways things were done were changed, lots of new rules came in. If you chose to consider pre 1988 complaints, you were in effect opening yourself up to having your cases reviewed under post 1988 rules even though they were written pre 1988. A case of shifting the goalposts. That was too much of a business risk for most small companies to take.

You need to note that regulation did not apply 29th April 1988. So anything sold prior to that date is not covered by that regulation. This is why the FOS cannot help.

My question is this: The final stage on the FSA complaints flowchart is going to court. Has anybody got any knowledge / experience in this area or advice on pursuing a claim in the courts - specifically defeating the time-barring by the IFA on pre-1988 sales?

As silvercar says, it's far harder to prove a mis-sale in court. The courts rely strongly on documentary evidence. They will be looking at the papers for the words "it is guaranteed to pay off the mortgage". If they see in the documents "there is a risk the endowment will not pay the mortgage in full" or similar, then you will find it very hard to win a case. The fact you didn't read the documentation doesn't wash as an excuse.

So this is why you rarely see a case go to court.

defender_of_the_weak

The 15 year rule is more important than any other. This known as the longstop rule. Obviously your case is older than this and would be challenged by the advisers solicitor and quite rightly thrown out if it got anywhere near a court.

shepherd_2

Silvercar & dunstonh & defender of the weak - thanks for your responses.

I have a written quotation which I think proves that my policy was missold.

Does anybody have any knowledge of claims under the Limitations Act 1980 Section 32 (intentional or reckless breach of duty)?

Froggitt

dunstonh wrote:

You need to look at this from the advisors point of view. After 1988, the ways things were done were changed, lots of new rules came in. If you chose to consider pre 1988 complaints, you were in effect opening yourself up to having your cases reviewed under post 1988 rules even though they were written pre 1988. A case of shifting the goalposts. That was too much of a business risk for most small companies to take.

I take your point dunstonh, but even pre-1988, IFAs had a "duty of care" to their clients......if they sold an unsuitable policy (eg running till post retirement, unfactual information), they still deserve to be made to pay for that.....after all they have had almost twenty years of trail commission plus many thousands of pounds of initial commission on that policy.

dunstonh

after all they have had almost twenty years of trail commission plus many thousands of pounds of initial commission on that policy.

There is an assumption that IFAs earn lots of trail on endomwents. It is false. I never sold any endowments as an IFA but I have transferred a number to my agencies over the years and would put the average renewals on them at under a pound each per month. No-one gets rich from that. Increased renewals/trails options are available but that is with a sacrifice of some or all of the initial commission.

I understand the duty of care but the FSA and earlier regulators have a history of saying one thing and then a few years later changing their views on it but retrospectively applying the rules. Not saying it is right or wrong but if you were in a business like that, would you voluntarily accept liability for things you don't need to ?

I actually wish the advisors themselves were more liable. Most are not around today but it's the advisors that are that get the flack and pay for it. The current debates on how the FSCS (and other levies) should be funded highlight that there is a growing desire to have the bad advisors pay higher levies and not have the good ones subsidise it. I really hope this happens as it would focus the mind of the minority who let us all down.

shepherd_2

I can sympathise with the diligent IFAs who find themselves tarred with the same brush as the worst culprits and who now have to pay towards the costs of running the regulatory apparatus.

It would appear from a laymans point of view that regulation has helped to get rid of the worst cowboy practices and give consumers easier comeback but the financial services industry still has a mountain to climb to regain consumer confidence.

Thank you for your contributions so far .... but could I bring the thread back onto its central topic?

I have a written quotation which I think proves that my policy was missold.

Does anybody have any knowledge of claims under the Limitations Act 1980 Section 32 (intentional or reckless breach of duty)?

defender_of_the_weak

I will look it up for you but it really won't help. The 15 year rule is more important. Even if such a breach of duty did exist, the only thing a court can do is symphathise with your problem. If it is more than 15 years since the action or event occured, regardless of negligence or otherwise, it can legitimately be blocked from court action.

shepherd_2

defender_of_the_weak wrote:

I will look it up for you .......

I will be very grateful for anything you can find out.

ReportInvestor

dunstonh wrote:

I never sold any endowments as an IFA.

Top man .

I can now see why you wouldn't need to defend any who did .