Phoenix (Royal life) Homestyle Endowment Plan

maharg104

Sorry for the long post newbie.

I have a £34,000 Endowment policy to pay off my mortgage but as of June 2005 there was going to be a shortfall of some £9,400.

Having used this web site and guidance gained from it I submitted a letter of complaint. However I have since had a reply, not the news I was hoping:-

Their Words

You stated that the adviser did not discuss in full the funds your endowment policy was to be invested in. However. these would have been detailed in the Product Literature you would have received.

Having reviewed all the information available, I am satisfied that the adviser did explain that there was a risk that the endowment would not meet the target amount therefore establishing your attitude to investment risk for this policy. As you have stated in the Mortgage Questionnaire 'the idea of the policy not producing the amount forecast was dismissed as negligible, therefore this policy was sold to us as a very low risk investment'. Although you have stated that the policy was a low risk investment, this is sufficient evidence to show that you were aware that there was the risk of a shortfall at the end of the term. Therefore, I am unable to uphold this aspect of your complaint.

ln addition, when considering taking this policy you would have received an illustration. The illustration included an explanation of the potential benefits of the policy. The figures in the illustration were to show what maturity value might be achieved at the end of the mortgage term and policy maturity date (depending on actual growth rates). These were illustrations and were provided to give an indication of what you could receive, based upon assumed rates of growth. These projected returns demonstrated that the final value of your policy could not be guaranteed to repay the target amount, or that it could mature with a surplus. Therefore I am unable to uphold your complaint in relation to the above points.

Taking into account the above, I advise that I am unable to uphold your complaint. I realise you will be disappointed with my findings but I believe this was the only decision I could reach based upon the information available. Obviously, if you can forward any
documentation to support your views and comments, I will gladly take these into account, otherwise my decision will have to stand.

Have I shot myself in the foot, or can I pursue this further, anybody have any thoughts?
Kind Regards

Graham

peterg1965

I am no expert Graham but this sounds as if it is a 'standard response' to Endowment misselling - their way of putting you off going any further. There are probably loads of people on here with great advice but you may well wish to seek some professional advice on how to proceed. Dont give up if you genuinely felt that you were mis-sold a policy all those years ago.

Hope this helps and good luck.

Pete

EdInvestor

Refer it to the Ombudsman.

https://www.financial-ombudsman.org.uk

It's up to them to prove they did not missell you, not you to prove they did.Many insurers have lost or destroyed all their files,so although they say you "would have" received this and that, they cannot show you did.

Obviously, if you can forward any
documentation to support your views and comments, I will gladly take these into account, otherwise my decision will have to stand.

So short on documentation are they, that they even say this kind of thing to try and get you to send them documents which might help their case - not yours. So don't. Just take your complaint on to the FOS.

defender_of_the_weak

This is fairly standard RSA response. What fund were you invested in?

Your comment 'I thought it was low risk' has put your case on the back foot somewhat but call for the original paperwork and see if risk is documented and discussed. My guess is this is lacking as the RSA fact find was usually scant/non-existent.

If you were in a unit linked fund, this usually carries a much higher risk than With Profits and is often unsuiatable for an investor who wanted low/no risk.

Go to FOS, bu also ask for the paperwork. I know I said that twice, its important

dunstonh

If you were in a unit linked fund, this usually carries a much higher risk than With Profits and is often unsuiatable for an investor who wanted low/no risk.

Funny you say that as I told someone to complain the other day as that was the reason given to justify the sale of with profits over unit linked.

If you take the with profits fund to be medium risk, then unit linked funds in index linked, gilts, fixed interest and commercial property are lower risk than with profits. So, excluding unit linked due to risk is technically incorrect.

maharg104

I checked to "Homestyle" brochure I think it is unit linked however it states that "contributions are invested in any of eight proffesionlly managed funds, linked directly to shares, properties and fixed interest investment"

The comment on the low risk is at the time Endowments were all the rage, as these would not only pay off the mortgage but also provide a lump sum :-( , and refers to the fact that it was dismissed as nothing to worry about in our case!

Hope this helps

maharg104

So Basically I should now take my complaint to the FOS, would it be prudent to also let Royal Life know that I have and does anyone have any suggestions it what to put in a letter (polite) regards

defender_of_the_weak

Dunston

I appreciate fully the range of unit lined funds, hence the word usually. If this was sold by a Royal Life adviser he/she would not be able to recommend fund choices and would normally dump them in managed.

FOS would inform RSA of the referral.

What fund are you in, maharg?

dunstonh

defender_of_the_weak wrote:

Dunston

I appreciate fully the range of unit lined funds, hence the word usually. If this was sold by a Royal Life adviser he/she would not be able to recommend fund choices and would normally dump them in managed.

FOS would inform RSA of the referral.

What fund are you in, maharg?

I know you would. However, it shows the limited knowledge of tied agents when they make out that with profits is lower risk than unit linked.

maharg104

Dear All,, Should I include my original statement to the FOS which made Phoeinx reply:-

"Although you have stated that the policy was a low risk investment, this is sufficient evidence to show that you were aware that there was the risk of a shortfall at the end of the term."

or Should I be more careful in my choice of words

regards

defender_of_the_weak

Difficult to say without knowing the funds you are in. Do you have an annual statement that lists numbers of units and fund names.

Any referral to FOS must spell out that you were unwilling to accept the level of risk attached to the underlying funds as a suitable way of paying a mortgage, although having seen some recent bizarre rulings I am beginning to wonder quite who they are employing