Help, endowment mis-sold, do I have a claim

sir_billy_whizz

Hi,(sorry this is so long)
I was sold a legal and general endowment in 1996 and wanted some advice/views on whether I have a claim.
I feel I was strongly led down the path of an endowment by the advisor, with a lot of talk about the potential lump sum at the end of it, and no talk about the potential of it not paying off the loan. The advisor made the repayment option sound poor saying they were not portable and if we were to move in the first few years we would be back to step one.
I have got the ‘Financial Review’ which was filled in by the advisor, part of it states that my attitude to risk was Med, I’m not sure how he came to this conclusion.
Also in this document is the section below:

Our recommendations

We discussed the advantages and disadvantages of repayment and interest only mortgages. Interest only was recommended as the client wanted a fixed end date to the loan, portability on moving etc. We discussed the advantages and disadvantages of pep, pension and endowment as methods of repaying an interest only mortgage. An endowment was recommended as this has built in life cover and offers the possibility of repaying the mortgage early. An (unreadable) was recommended for its flexibility, portability, regular policy reviews and potential for early repayment, I explained that this was not gtd as units may fall as well as rise. I explained if growth exceeds 7.5% this may create a surplus or potentially repay the loan early. I have included critical illness cover a full explanation and accompanying literature has been given, I explained if clients were to contract a defined illness or die the full mortgage would be repaid, the reason I recommended a managed fund is to reflect the client’s investment attitude.

The above states I wanted a fixed end date to the loan, am I right in thinking that this is not delivered by selling an endowment mortgage?

On the form was a declaration that stated amongst other things ‘we are satisfied that genuine efforts have been made to identify our needs and to meet them through the recommendations set out earlier’ and ‘we acknowledge receipt of the key features for each of the products applied for and confirm that the representative has gone through and explained the documents to us’. At the time I just signed the form but now feel these things were not done.

Does signing this statement considerably weaken my case?

Should I use this document as part of my case?

Any other advice on how to best put my case forward?

Thanks in advance for your help

dunstonh

The above states I wanted a fixed end date to the loan, am I right in thinking that this is not delivered by selling an endowment mortgage?

It is the same with all mortgages.

Does signing this statement considerably weaken my case?

Yes.

Should I use this document as part of my case?

They will use it to protect themselves.

Any other advice on how to best put my case forward?

The documentation seems to satisfy the requirements to discuss all options. It mentions that it is not guaranteed and it mentions the target growth rate.

Although the wording is not as tight as I would like it to be, I think they advising company would look to reject the complaint on the grounds that the risk was explained along with the other options and that you signed to confirmed that these explained to you.

defender_of_the_weak

Sounds like L & G standard paragraphs to me. Everybody on a L&G fact find comes up as 'med'. Compare what is written to your actual circumstances. Did you have any other investments? Were you truly willing to put all your money in to an investment that could see 30% of the value wiped out in the last month. Did you have any penson provision.

If this statement is to be believed, the adviser discussed the option of repayment via a PEP which is totally tax free and put you in an endowment where the fund is taxed (assuming you have bought an endowment and not the L&G hybrid PEP from the time.) Why would you reject the tax free alternative over the taxed fund when they would both be invested in the same areas.

sir_billy_whizz

Thanks for your replies

defender_of_the_weak wrote:

Did you have any other investments?

I think I may have had a company share option scheme

Were you truly willing to put all your money in to an investment that could see 30% of the value wiped out in the last month.

Not if this had been fully explained to me.

Did you have any penson provision.

A company pension.

If this statement is to be believed, the adviser discussed the option of repayment via a PEP which is totally tax free and put you in an endowment where the fund is taxed (assuming you have bought an endowment and not the L&G hybrid PEP from the time.) Why would you reject the tax free alternative over the taxed fund when they would both be invested in the same areas.

I did not know and was not told a PEP was tax free, I was only told it was alot more risky.

EdInvestor

They will use it to protect themselves.

Always assuming they haven't destroyed the file, of course

Where does it warn the endowment might not repay the mortgage?

An (unreadable) was recommended for its flexibility, portability, regular policy reviews and potential for early repayment, I explained that this was not gtd as units may fall as well as rise.

This only says that early repayment was not guaranteed.

I explained if growth exceeds 7.5% this may create a surplus or potentially repay the loan early.

This is very misleading.

It should say something like: "if growth falls below 7.5% the endowment will not pay off the mortgage."