Life Insurance/Investment Mis-sold?

chocoholic007

I took out a whole of life policy approx 17 years ago. Was told at the time that investments would grow over the years and I could draw at any time from them or when my children went to uni or could leave it and draw it in my retirement. Also had cover built in for life insurance and critical illness cover. At no time was I told the "insurance" side of it the premiums would go up. Now I find out that insurance company have been taking money out of my investment side to pay increased life insurance premiums (which they have never informed me of) When I phoned to find out what was going on they asked me if I thought I had been missiold the policy. I'm pretty sure now that I was. Does anyone know where I stand and what I should do? I thought you could only claim for missold endowments and PPI?

dunstonh

Does anyone know where I stand and what I should do?

The product is going exactly what it should do so on that front you no arguments. Legacy WOL contracts were designed to provide a lump sum on death. As you get older the investment element is used to pay for your increased cost of cover. Back in the 60s, 70s, 80s and early 90s, the returns had outstripped the cost of life cover and put a fairly good return on top. The move to a low inflation economy rather than boom and bust (ok we know different now but the sustained period....) put an end to high investment returns and the life cover would have started to erode the lump sum.

These plans were not savings plans. They are life assurance. The savings element was a by product.

So, just looking at the product, it is doing nothing wrong. Albeit being very out of date and almost certainly expensive compared to modern versions (many of which dont have an investment element).

I thought you could only claim for missold endowments and PPI?

If you bought with advice and the advice is wrong, then you have full consumer protection to complain about the advice if you were misled.

So, on that basis you do have grounds potentially for complaint. However, if the recommendation is documented to reflect how the product works, you are likely to suffer a rejection. If the documentation has been destroyed, mislaid or was poorly written by the adviser, then you have a good chance of success.

the-chauffeur_2

Endowments and PPI policies have received a great deal of media attention in the last few years, but complaints about mis-selling can be raised about any financial services product. If you feel your policy might have been mis-sold, you can lodge a complaint with the organisation responsible for the sale. For more guidance, have a look at the complaints section of the website of the company that sold the policy, or the Financial Ombudsman site.

That said, you should be aware that the length of time that has elapsed since the sale of the policy (being the event you would be complaining about) may cause you some difficulties - meaning your complaint could be time-barred. Again, the Ombudsman site should give some useful guidance.

Hope that helps

chocoholic007

Thanks for these responses they are very helpful. The policy was definitely sold to us as both Life Insurance with investments as well. At no time where we given any indication by the Adviser (Salesman) that there would be no money in later years, rather, we were led to believe there would be a substantial sum available to us by now.
Would we be better off pursuing this ourselves with the company or should we get a specialist company to do this for us. Which gets a better result?

dunstonh

Would we be better off pursuing this ourselves with the company or should we get a specialist company to do this for us. Which gets a better result?

There is no evidence that a claims company improves your chances. Indeed, the FOS have stated in the past that significant number actually reduce your chances (some use a standard letter giving every possible reason under the sun. These can work against you if the evidence shows a number of the points are incorrect. In areas which cannot be proven either way, if one party has made false claims, then on balance of probability decisions where no evidence exists either way, its likely to work against them). A good claims company can do a good job in complex cases. There are just too many that use a template one size fits all job and then take 30% of your redress for the 30 seconds involved in churning that letter out.

You dont need to write war and peace. Keep it short as possible and write it in bullet point form. They will address each bullet point. It is the requirement of the advising firm to show the advice was good. Not for you to show it was bad. The onus only swings towards you when they have evidence that counters what you are saying.

The policy was definitely sold to us as both Life Insurance with investments as well.

The product was fairly normal with the sales forces (Allied Dunbar, Abbey Life and AXA in particular) at the time. Part of the problem is not necessarily the info you were given but the fact that times move on and the product doesnt work well in a low inflation economy. Its obsolete. That doesnt mean it was obsolete when it was sold though. Cars now have loads of features which didnt exist in cars 17 years ago. Yet you cannot go to a dealer and claim your money back because your Austin Allegro he sold 17 years ago didnt have anti lock brakes and sat nav.

In the case of salesforces, they dont have to offer you best advice like an adviser would.. They only have to offer the closest match from their product range. Companies like Allied Dunbar etc didnt have pure life assurance. Every protection product had an investment element back then. So, the complaint will be measured on was it the best product in our range at the time and was it complaint with the sales process and rules that were in place at the time. It wont be measured on the fact that a pure term assurance from an IFA was a better option.

chocoholic007

Thanks for your time in replying. We actually went to a financial advisor at the time we took out the policy. Maybe we were naive at the time, but we only realised some time after we took out the policy that the "advisor" was actually working as an advisor attached to Cannon Lincoln. The annoying thing is, we actually spoke to an independent financial advisor last year (it was a free service attached to our building society) and he said that the policy was great and that we should keep it. He obviously never noticed either that our investments were going down. We actually said to him at the time that we had took out this policy so that we had some money coming from it in later life.

dunstonh

The annoying thing is, we actually spoke to an independent financial advisor last year (it was a free service attached to our building society)

That means he isnt really independent. Technically he is but he has an employer and has to act in accordance with the guidelines. Wherever there is an employer, they pull the strings on things. Plus, banks and building societies tend to the be training ground for advisers. That is perhaps why independents account for just 2% of complaints but banks & B/soc account for over 50%.

He obviously never noticed either that our investments were going down

As he wasnt the servicing adviser, he wouldnt have a history of the value. Just a snapshot of there and then. Servicing IFAs and Planner IFAs would have the history and access to software that allows that sort of thing. The banks are transactional advisers. Its a different model.