endownments and the ombudsman

billozz

i have recently received an offer of compensation from my building society for the shortfall on my endownment, its not a brilliant offer and i am considering the next stage of going to the ombudsman, if i do this is it possible for the offer to be reduced or can it only get better
thank you

EdInvestor

Compensation is based on a formula set by the regulator. The FOS could check the figures for any mistakes - which could be in your favour or not,as the case may be.

If you thought that the compo should cover the shortfall, I'm afraid that's wrong.The compo is calculated to put you in the same position as you would be in if you had selected a repayment mortgage.

What you now need to do is surrender the endowment, see a broker about a new repayment mortgage, and then reduce the amount owed by both the endowment proceeds and the compensation amount. Then increase the monthly payment to include the endoment premium.

Whether you will have to further increase the monthly payment to pay off the mortgage on time depends on how low an interest rate you can get on the new mortgage. You may have to increase the monthly payment a bit - or extend the term a bit if you need to keep your monthly outgoings the same.

Overpaying the existing I/O mortgage with the S/V proceeds, compo money and endowment premium is another way of dealing with the problem.

Don't forget to allow for the cost of replacing the life cover if you need to, and do that before surrendering the policy.

Post some figs here to check that there is no reason not to surrender:

Guaranteed sum assured
Declared bonuses
Surrender value
Monthly premium
Maturity date

dunstonh

You should also note that the company may withdraw the offer if you go to the ombudsman. The ombudsman would then ask for a recalculation. With an ever improving stockmarket, the recalculation could result in lower compensation. Would the company still honour their original offer? Is it worth the risk?

full-time-mum

EdInvestor wrote:

Compensation is based on a formula set by the regulator. The FOS could check the figures for any mistakes - which could be in your favour or not,as the case may be.

I understand the bit about putting you in the position you would have been had you been on a repayment mortgage, however, how does one go about working out what the compensation should be?

We are in the position where the FSO has upheld our case, the IFA disagrees and the case is being referred to the ombudsman for an adjudication.

Our concern is that the IFA, who disputes our claim, will be the one doing the compensation figures. Will the process be transparent and will we get to see the workings out?

billozz

dunstonh wrote:

You should also note that the company may withdraw the offer if you go to the ombudsman. The ombudsman would then ask for a recalculation. With an ever improving stockmarket, the recalculation could result in lower compensation. Would the company still honour their original offer? Is it worth the risk?

i dont undestand why they should withdraw the offer just because i go to the ombudsman, either i am due compensation or im not, just because i dispute the ammount, how can they change their minds

dunstonh

If you choose to delay the compensation payout because you disagree with it and it takes 6 months to go through the ombudsman, that is another 6 months payments and another 6 months of performance to take into consideration. The original offer is out of date and a recalculation may be necessary.

Some offers are made because its cheaper to offer payment rather than you go to the ombudsman. In these cases you usually see the provider not admitting liability for a mis-sale. If you then decide to go to the ombudsman, they can withdraw what they may have classed as a goodwill gesture before and see what the ombudsman says.

EdInvestor

full-time-mum wrote:

Our concern is that the IFA, who disputes our claim, will be the one doing the compensation figures. Will the process be transparent and will we get to see the workings out?

Yes, ask for the figures. The formula is quite complex.If you think the result is wrong ask the Ombo to check it.

full-time-mum

EdInvestor wrote:

Yes, ask for the figures. The formula is quite complex.If you think the result is wrong ask the Ombo to check it.

Not something that we can do beforehand - then to get a rough idea?

full-time-mum

billozz wrote:

i have recently received an offer of compensation from my building society for the shortfall on my endownment, its not a brilliant offer and i am considering the next stage of going to the ombudsman, if i do this is it possible for the offer to be reduced or can it only get better
thank you

Be warned, it took our claim over a year to be assigned an investegator and another 6 months of to-ing and fro-ing between us, FSO and IFA to get a conclusion. We have just recieved a letter saying that IFA is in disagreement and our case is being referred to the ombudsman for adjudication - it warns that case loads are high and we may have to wait.
We also found the whole thing stressful, putting our case together, answering queries, waiting and waiting for responses etc so I would suggest that you need to be sure that the compensation on offer really is unreasonable.

Have you seen the calculations and is there someone else who could check them and give an opinion?

vinno65

Hi Dunstoh, they can not withdraw an offer just because you take a complaint to the ombudsman. This is ludicrous and I do believe you are trying to lead people up the garden path. It costs a firm £350 when a complaint is forwarded to the FOS and i would suggest to you that it would be extremely rare (not impossible i grant you) to have a redress figure coming it at under £350 pounds. And to think that these firms have any goodwill well!!!
regards Vinno

vinno65

Hi Full Time Mum,
the redress calculations are based on a calculation set up by the FSA. You must answer any questions about any fixed rate deals you may have had or any lump sums you may have paid off or even if you have switched part of you mortgage to a repayment. These are all taken into consideration when calculating redress and these will be checked by the Ombudsman. If they are wrong he will put them right and the firm is then duty bound to pay what the ombudsman says. Hope this helps
regards Vinno