Endowment Compensation Offer - What now?

Mangoman_2

Hi there
I have an endowment that is not specifically linked to a mortgage but went down the mis-selling claim route, as I figured nothing ventured etc.

I have a 25 yr, £3.5k sum assured, £10k life benefit policy, £10k target.
With 10 yrs remaining the valuation statement says projected final amount to be £5300, with a 'promise' of £2100 that therefore totals £7400, some £2600 short.

On making a complaint I have been offered £4100 - made up in the offer letter of Premiums paid of £2700 and interest of £1400.
The letter of acceptance for me to now complete states that this £4100 is made up a surrender value of £3000 and a compensation payment payment of £1100.
Am I thick but these do not read the same to me?

The options I now have are to continue the policy retaining the 'promise' and hope for the best over the next 10 years or to accept and re-invest.
Which is best?
I know there is a death benefit on the policy but I do have other more easily understood policies that cover this eventuality.
Thanks for any help
Thom

exil

I don't see why you are getting any compensation at all, since it's not linked to a mortgage, and until we know the basis on which you're being compensated it's a lttle difficult to comment further.

Mangoman_2

Thanks for quick response.
To quote the letter recieved
'As your policy was taken out for savings and not for the purpose of an interest only mortgage I (the customer relations officer) have to conclude that the endowment did not meet your needs at the time of sale'

My claim was based that on the information provided at the time there would be an expected sum over and above the assured sum. My query though is not obviously about the compensation per se but whether I would be best advised to take the offer and re-invest of relinquish the offer and retain the policy.
Thom

dunstonh

Refund of premiums plus interest is the norm in these cases. They are in effect, voiding the policy, which is what you are asking them to do with your complaint.

Mangoman_2

If this is the norm why is it explained in two different ways Then?

Also - What do I do? Stay in or get out?

dunstonh

If this is the norm why is it explained in two different ways Then?

Probably a standard Letter. The end result is the same.

Also - What do I do? Stay in or get out?

Why would you want to keep something you complained about having?

Mangoman_2

Its about cutting losses or maximising the potential of whats there. Isn't that what moneysaving and championing customers is about here?
I get the impression that you are overtly suspicious of my motives in this genuine query. I took out this policy as a 19 year old student, unable to contribute to a pension due to lack of earnings and wanting something to invest during college years that wouldn't break my back. I also required something flexible in terms of changing contributions as my ability to pay improved. This was the understanding I had of this policy. On reciept of warnings with regard to its target shortfall I complained as mis-sold which they've agreed to. It hasn't met these needs so I'm asking the questions. Therefore to cut losses or maximise potential as it stands today my question remains - Should I stay or should I go (now!)

dreamylittledream

Mangoman wrote:

Its about cutting losses or maximising the potential of whats there. Isn't that what moneysaving and championing customers is about here?
I get the impression that you are overtly suspicious of my motives in this genuine query. I took out this policy as a 19 year old student, unable to contribute to a pension due to lack of earnings and wanting something to invest during college years that wouldn't break my back. I also required something flexible in terms of changing contributions as my ability to pay improved. This was the understanding I had of this policy. On reciept of warnings with regard to its target shortfall I complained as mis-sold which they've agreed to. It hasn't met these needs so I'm asking the questions. Therefore to cut losses or maximise potential as it stands today my question remains - Should I stay or should I go (now!)

dunstoh speaks with the cynicism of an IFA who no doubt has had endowment complaints (possibly injust) directed at himself.

In your situation a low cost endowment was clearly not suitable for your circumstances ( a low cost endowment with a higher life cover amount then sum assured is designed to back a mortgage not as a savings vehicle). There were other more suitable investments you should have been directed to.

The offer of redress is fair in these circumstances (effectively all your money back with interest) as you should never had been recommended it. The two ways of wording the offer on the forms make no difference - the basis the offer was made is a refund of premiums plus interest. However as the policy is worth £3k now to surrender the additional 'compensation' is £1100.

As for whether to accept or not - dunstoh does make a valid point - you weren't happy with the policy and the firm have made a fair offer to put things right. Endowments are a risk based investment, so in your case you have decide whether you wish to continue taking a risk with this policy (which has performed poorly as you compensation shows) and whether the policy will ever be suitable for what you want it for...

dunstonh

dunstoh speaks with the cynicism of an IFA who no doubt has had endowment complaints (possibly injust) directed at himself

1 - I have never had an upheld complaint of any type.
2 - I have never sold an endowment as an IFA.

Why you choose to read my responses in that way, i do not know.

Personally I think the whole endowments complaints process was a complete mess and neither suited advisors or policyholders but only the insurance companies with low financial strength. So I do have some cynicism of the system but I have no personal axe to grind.

My comments were made on the basis that if you complain that you should never have been sold a policy and the advising company agrees and compensates you as such, why would you then want to hold on to that policy?