Miss sold Pension linked Endowment Mortgage policy 1986

mule11

Subject: Miss sold Pension linked Endowment Mortgage policy 1986
(Standard Life policy)

I have a Pension linked Mortgage policy taken out 28/10/1986 till 2010 to cover a mortgage of £18,500 together with life insurance, which was sold to me by Anglia Investments of Northampton, who went out of business & was taken over by Bruce & Partners then subsequently Alexander Forbes, Gloucester.
In 1999 I changed jobs & entered a company pension scheme, (for the first time in my life), not realising I could not have both this & the Pension/mortgage, (however I have been since advised that being a money purchase scheme I perhaps could have both). So I put the policy on hold & joined the Company Pension scheme. Once this was sorted it came to light that if the plan had carried on as normal there is no way the payout would have achieved enough to cover the mortgage with the maximum 25% allowable from the total fund, where 75% goes towards the pension. It would need to achieve a minimum £74,000, & recently I was given a maturity speculation of £35,000 total only if I continued with all payments due!
Incidentally, this was the first time I had any knowledge of this 25% bit, after 13 yrs. My understanding was that at the end of the term I had the choice to pay off the mortgage & use some of the balance &/or leave it towards a pension; otherwise I would have had a normal endowment as before. The only reason I took this, apart from being strongly advised by the IFA (little did I know that they received high commission on these policies), was because the premiums were only a couple of pounds more & I would get a pension to boot. Also I was not advised about the tax relief that I thought was done at source. It was not until 12 yrs after the policy was started that I realized this & unfortunately could only claim back 6 yrs. As the tax relief (1st 6 years) was not claimed shouldn’t it have been ploughed into the plan?
Because I had put the policy on hold I then found myself paying an extra £100+ month on the repayment method to the building society to cover the £18,500. On top of this I had to get another life insurance because it was also linked to the pension policy. This was arranged through the IFA, Alexander Forbes, who stated that I would not be required to take a medical. It turned out that I did need to take a medical (thankfully all ok) but the life insurance premium went from £4.11 (that incidentally my wife’s cover is still in action at this cost) to £18.56 (albeit with some critical cover)!
Anyway back to the main theme, I am frustrated by being passed around from pillar to post from financial advisors to the PIA when nobody seems to want to help resolve this matter. On the one hand A Forbes are saying it was a previous IFA not them (do they not have to take on responsibility as par for the course?). They told me to contact PIA who are not interested because it is prior to 1988. I have since contacted Standard Life direct but they refer me back to the advisor, (full circle ‘dear Lisa, dear Lisa’), because it was not one of their direct personnel & they are not aware of the actual plan details, nor are they particularly interested morally or otherwise.
They tell me if it were their personnel they would be liable for miss selling but not if it is an IFA. This gives me great concern for the massive number of persons who are constantly advised to contact an IFA, if that IFA goes out of business &/or is taken over it would seem there is no redress. When I suggested to Standard Life that therefore it is unsafe to use IFA’s because of this & perhaps I should have checked out the best deals with an IFA then contacted the favored company direct so that they would be responsible for the plan, they agreed this would be a safer method for the client, but I would not be allowed to do this because of the arrangement between the companies & the IFA’s; in that the query would have been set-up with the IFA & ethics etc I guess.
This seems to me that the company can have their cake & eat it. They are not required to check the plan they are being paid for (maybe falling back on the client data protection act), if forwarded from an IFA, or accept any responsibility for a ‘non-company’ advisor, even though they may be miss selling the product that should surely reflects on them both. That being said it seems unsafe to use IFA’s & if this were correct then I would imagine this is opening a can of worms.
My understanding, from most if not all advisory columns/companies, is the whole point of going to an IFA is to get the best ‘unbiased’ deal’; but if you draw a analogy with purchasing goods then it is fundamental to have a good back-up service. An IFA, allegedly, obviously does not give this so
perhaps it is time to reassess this prolific advice?!?

The plan is still lying dormant but active; do you think I have a case? Cash flow etc is very tight, so it would be most welcome to hear some good, positive news if you are you able to help with this, thank you.

Your Sincerely

MULE11
PS I hope to hear from many persons please, including MSE ML :money: , thank you

dunstonh

They tell me if it were their personnel they would be liable for miss selling but not if it is an IFA. This gives me great concern for the massive number of persons who are constantly advised to contact an IFA, if that IFA goes out of business &/or is taken over it would seem there is no redress.

That is incorrect. Sole Traders/Partnerships have a lifetime liability. Limited companies, if closed down, have the FSCS to fall back on. However, that didnt come in until 1988 and covers all business since then.

When I suggested to Standard Life that therefore it is unsafe to use IFA’s because of this & perhaps I should have checked out the best deals with an IFA then contacted the favored company direct so that they would be responsible for the plan, they agreed this would be a safer method for the client

This is also incorrect. If you had done that, the "favoured" company would have no liability because they would not have provided any advice and the transaction would have been on "execution only" basis. You would be in exactly the same position.

but I would not be allowed to do this because of the arrangement between the companies & the IFA’s; in that the query would have been set-up with the IFA & ethics etc I guess.

Also not correct. You could place the business on execution only basis with whomever you liked. It may have taken an (another) IFA to do it but it can be done. Also, some providers offer direct channels to do it. Again, without advice so no different from the position you are in.

This seems to me that the company can have their cake & eat it. They are not required to check the plan they are being paid for (maybe falling back on the client data protection act), if forwarded from an IFA,

And quite correctly so as well.

or accept any responsibility for a ‘non-company’ advisor, even though they may be miss selling the product that should surely reflects on them both.

They get an application form in the post and set it up as instructed. The wont have any other information so why should they accept any responsibility.

That being said it seems unsafe to use IFA’s & if this were correct then I would imagine this is opening a can of worms.

Its a good job its not correct then.

The plan is still lying dormant but active; do you think I have a case? Cash flow etc is very tight, so it would be most welcome to hear some good, positive news if you are you able to help with this, thank you.

No you don't I'm afraid.

You are in an unfortunate position of transacting business prior to regulation. However,

however I have been since advised that being a money purchase scheme I perhaps could have both

Not in 1999 you couldnt. That didnt change until 2001.

Pension mortgages were a good idea at the time. With higher tax rates back then and therefore higher tax relief it was good theory when looked at like that and with the boom/bust economy at that time, everything would have added up and made it look like a good idea. However, tax rates came down, interest rates came down, inflation came down, Gordon Brown hit pension funds for £5bill a year and then we had the stockmarket crash and everything that made pension mortgages look good, suddenly made them look rather poor with only a higher rate tax payers perhaps still seeing a small advantage.

This is why whenever you invest money, you shouldnt just leave it there on the assumption that something set up 20 years earlier is still going to be good. Things change. You need to monitor things. As it happens because of what has changed, you are better off than you would have been under the old boom/bust economy which would have seen your pension mortgage work.

Whilst I have sympathy with your position, you have been fed a bit of misinformation from SL (which doesnt surprise me as they are the masters of misinformation and bad management).

silvercar

Sole Traders/Partnerships have a lifetime liability.

Exactly the reason that most people form limited companies - to limit their liabilities and protect their home , savings family etc.

I was in exactly same situation SL policy, pre- 1988, sold I thought by an IFA, he claims he did it through his company which he has now wound up.

Compare to L&G who have no records and so accepted that I might have been sold it by one of their agents and accepted liability. (Though they then calculated I wasn't due compensation - funny that.)

exil

Interesting comment from dunstonh about the boom-bust economy. Perhaps we need a spell in No 11 from a 1970s/1980s style chancellor like Healey or Lawson to stir up a bit of good old-fashioned inflation!

mule11

Subject: Miss sold Pension linked Endowment Mortgage policy 1986
(Standard Life policy) posted 24/3/06

Thanks for your comments, particularly dunstonh. As you can imagine I have been quite riled by all this especially getting the 'double'whammy' of losing out on 6 yrs tax relief & the 'junk bin' comment "oh it was pre 1988, dont want/need to know"!

I'm probably clutching at straws but is there not any 'extra cover/laws' to do with the pension aspect as opposed to the run of the mill endowment? Also do you have any comment on the fact I was never informed of the 25%max only towards mortgage?

mule11

dunstonh

I'm probably clutching at straws but is there not any 'extra cover/laws' to do with the pension aspect as opposed to the run of the mill endowment? Also do you have any comment on the fact I was never informed of the 25%max only towards mortgage?

A pension mortgage was certainly higher risk and you in any other period post 29th April 1988, you would probably have a successful case. However, you know whats coming next... Because its 1986, you dont have anywhere to go with it i'm afraid.