time bared

Ellemaid

Hi,

I wounder if anyone can help me...
My father bought a home with endownment policy in 1990. took out £81,000 for a 20 year term.
Now, he is in a situation where he is very likely to be in a short fall of £20,000-£25,000 at the end of term.
Having realised this, we wrote a letter to the insurance company (lincoln financial limited) informing them that we have been mis-sold with very little information, and asked them to pay the difference. They informed us that we were time-bared and there is very little we can do. they also said, we were written letter in the last 3 years about the problem, and asked us to act to solve the problem. However, we did not recieve any letters of that nature. but the problem is there is no way of proving that.
now, i am in the process of writing a letter to the financial ombudsman of this situation. I have filled in the 2 different forms that is available on the internet.

I was going to write all the above on the form, and also tell them of the current financial situation. in that, my mother is unable to work due to her, and is claming benefits. its only my father's wages. there is two of us. We are both full time university students.

Is it a good idea to give them our current financial situation?
what other information can i tell them?
Is there anything else i can do to claim back the money?
Does anyone have any advise as to whats the best way forward?
I would be very grateful for any infomation.

Thank you

dunstonh

Is it a good idea to give them our current financial situation?

No. It has nothing to do with the advice given back in 1990. The FOS aren't going to be swayed by hardship stories unless the advice given has caused that. The advice hasnt caused that so no point going there.

what other information can i tell them?

Very little really. If the time bar has been applied correctly, then the ombudsman will side with Lincoln. If the time bar has been applied incorrectly, they will ask Lincoln to reconsider the complaint. That is you only issue here.

Is there anything else i can do to claim back the money?

If the ombudsman fail to side with your parents (which is likely), then the last option is legal action. However, this rarely happens because, unlike the complaints proceedure which favours the policyholder, the courts require your parents to prove mis-sale. The biggest difference is that the court would look at the documentation issued at the time. This will say that the amounts were not guaranteed and that a shortfall was possible. The fact your parents chose not to read the information before signing the contract is not something the court is likely to be sympathetic to.

Does anyone have any advise as to whats the best way forward?

If its an endowment in Lincoln's unit linked funds, then things may not be too bad. Good chance this could come back round if it is in the right funds. It should certainly be reviewed.

Ellemaid

thank you for your reply.

My father bought the took the policy on his own with another family member.
He knew very little about any of it. He was not given all the information.
He just went on pure trust.
It is not any excuse. Im only trying to find the best way forward to solve this.

Is there any point in writing to the ombedsman?

The policy is unit linked. it is in funded in 2 different place:-

Fund Name Fund number Units Value
Managed S3 Acc 478 3,656.417 £34,074.15
Money S3 Acc 482 1,421.438 £8,313.99

Total Fund value:- £42,388.14
Surrender value:- £42,388.14

What does all this mean?

thank you

dunstonh

Is there any point in writing to the ombedsman?

If you think Lincoln are unfair or incorrectly applying the time bar. Otherwise, no.

Fund Name Fund number Units Value
Managed S3 Acc 478 3,656.417 £34,074.15
Money S3 Acc 482 1,421.438 £8,313.99

Total Fund value:- £42,388.14
Surrender value:- £42,388.14

What does all this mean?

It means that £8300 is in a fund that is wholly inappropriate for an endowment. The managed fund is appropriate but rather poor. Other funds exist which should be more appropriate.

As Lincoln were tied financial advisors, they didnt have to recommend the funds. So, although one of the funds is inappropriate, there is no come back there. It's one of the major risks when you see a tied agent, rather than independents who do have to recommend funds and do have a comeback

That policy is unlikely to hit target. However, a fund switch into more appropriate funds could reduce the potential shortfall. This could be compared with a switch to repayment mortgage or a switch to ISA. Which of the three is best would depend on figures being obtained and life cover requirements.

Ellemaid

Thank you for making this so simple to understand, and a very quick response.

we have four years before the end of term.
My father is looking to pay of the rest by repayment plan.

I was thinking of carrying on paying the endownment plan, and then pay the difference, which they have estimated to be £22,000 odd, depending on the interest rate. If we want to change the funds, how would i go about doing that? what would be the best place to find out about funds that are appropirate and which will help this situation?

Would it help if we change our bank? at the moment we are with halifax. They have been the providers from the beginning.

or, i was also thinking of re-mortgaging the propery just for the amount that is needed to pay of the endownment policy. is that such a good idea. we have no idea of selling our house. it is worth around £250,000 in the current market.

dunstonh

Budget on that shortfall of £22,000. However, with it's current funds, I would rather you budgeted on £25,000.

You really need to get some advice. I cannot really do it justice here but what you need to do is compare the costs of the following.

1 - surrender endowment, pay off the mortgage with the surrender value and switch remaining balance to a repayment mortgage. (replacement life cover should be costed and would depend on health)

2 - Surrender endowment and switch to ISAs/Unit Trusts. These are cheaper than life funds usually (but not always) and the tax advantages for basic/nil rate taxpayers can add upto 1 percent a year in performance on like for like funds. (again, replacement life cover would need to be considered)

3 - Keep the endowment running but review funds. Sometimes, endowments have all the charges front loaded at the start and in future years there are little or no charges. Going forward, this could be the best option but switch to alternative funds offering greater potential. Like the ISA option, this is still a risk option. To put that in perspective. 4 years of growth like last year and it would hit target. Another stockmarket crash between now and maturity would see another loss putting your father off target.

These 3 options can be compared in cost by an IFA or yourself with a bit of work. You would need to get projections from the endowment (which you sound as if you have) and then get projections on ISA basis to compare. You would also need the lender to confirm monthly payments on option 1. These three options could then be compared in price and risk and a decision made to what is appropriate.

If we want to change the funds, how would i go about doing that?

Contact Lincoln, asking for a list of funds available and if any costs are incurred in switching. Ask for a fund switch form at the same time.

what would be the best place to find out about funds that are appropirate and which will help this situation?

Your own research or seeking independent advice.

Would it help if we change our bank? at the moment we are with halifax. They have been the providers from the beginning.

Not really, unless you are thinking of extending the term. Then it could well do. Getting a better deal (i.e. lower rate on the mortgage) allows your father to then save more to cover that shortfall. If extending the mortgage term isnt an attractive option or not possible, he could contact the halifax and ask if they would offer him any mortgage deals.

or, i was also thinking of re-mortgaging the propery just for the amount that is needed to pay of the endownment policy. is that such a good idea.

No. Extending the term of the mortgage would be the option to consider if the figures in the above 3 options turn out to be too expensive or unnattractive. You could approach the lender now and let them know there is a probable shortfall on the endowment and whether they will allow some more years to be added.

Ellemaid

many many thanks for your reply.
i am a lot clear on what should be done now.

all i can say is thank you for your help. thank you :beer:

EdInvestor

Ellemaid

What is the monthly endowment premium payment?

Ellemaid

my father payes £300 a month

defender_of_the_weak

It may be possible to challenge the time bar, when did the three year period end? What was the date of the first high risk letter sent by Lincoln. If the 3 year period ended after 1/6/04 and they have failed to provide a timescale/date by which the complaint should be received then they should not be allowed to timebar.

Test cases still arguing this with FOS so unsure of result (with FOS its a bit of a lottery at the moment) but possibly worth a challenge

Ellemaid

hi,

We didnt recieve any letters from them. I dont know when they wrote the first letter. the problem is i cannot prove that.

On their final decision letter, they informed us that the the last date we could have done anything was in 29 December 2005.

I was thinking of sending the forms to the ombudsman, without any personal financial information and just sticking to the facts and see how far it takes us.
Please dont think im not listening to denstonh. i just think there isnt a loss by taking it to them. while doing that, im thinking of having a meeting with the bank and see what information i can get from them, and take it from there.
I just want to everything possible, take all the possible roads available, and see where i get.

I am grateful for any advice.

Thank you all