Endowment claim need advise urgently please

halses

Hi everyone

This is a tricky one so i would really appreciate some advice.
My father-in-law took out an endowment policy with abbey in 1994. When looking to sell his house 2 yrs ago he contacted Abbey and they told him he didn't have an endowment policy.
It turns out Abbey started his policy before he bought his house and so he had to put the policy on hold until completion.
Abbey never re-started his endowment policy even though there is a fax from his solicitors asking them to ensure it is put in force before completion.
We have been battling Abbey through the Ombudsman now for nearly 2 years and the FOS have come back again with no compensation as they all say it was down to my father-in-law to ensure the policy was in force. He has paid an interest only mortgage for 14 years under the impression he had an endowment to pay off his mortgage.
In the Abbey paperwork it states that it is up to Abbey to ensure an endowment policy is in force either through them or another provider before they complete the mortgage.
HELP
Where do we go from now.
Is it worth paying a solicitor to go to court?
I have to get back to the FOS before the end of the month so I need advise quick.
Thank you in advance

dunstonh

Is it worth paying a solicitor to go to court?

The FOS generally follow what a court of law did. Although the FOS is slightly more consumer biased as they have a principle of looking at fairness whereas the court would not.

It is the responsibility of the individual to make sure the endowment is in force. The solicitor may have faxed through a request but did they send it to the endowment provider or the bank branch? Was the endowment arranged by Abbey or a third party?

If the Abbey staff member couldnt find the endowment they may well have assumed that it was one arranged by an IFA and that they had to do nothing.

Why didn't your father-in-law query it when no policy document arrived and no monthly premiums started or when no statements arrived?

As it stands, your Father has been better off each month for 14 years and ironically, given the recent market crash, he is probably better off overall as in normal times endowment break even around year 10. With the crash, that has been pushed back and its possible the endowment, had it existed, would be worth less than he paid in.

He now needs to change the mortgage to repayment basis and ask Abbey if they will adjust the term to compensate for the increased cost (if he cant afford it). Given his complaint, they should allow him to do that providing it doesnt go past retirement (if it does he would need to prove affordability in retirement).

Or he can use his personal savings to reduce the mortgage balance. (he must have built some up since he was paying less than he was meant to) and then switch to repayment basis.

halses

hi
thanks for your quick response.
The endowment was set up along with his mortgage and was with abbey life. They also set up all his insurances and they are all running fine.
He is not very money savvy and this was his first mortgage. He presumed abbey were taking all the money out as they were with his insurances and ppi.
Do we have a leg to stand on in court?

dunstonh

The endowment was set up along with his mortgage and was with abbey life.

So, the insurance company was Abbey Life and the lender was Abbey? If that is the case then the two companies have no links. Abbey Life was owned by Lloyds TSB at the time you took this out and Abbey would have no authority to tell Abbey Life to start the endowment. Only your father in law or the adviser that set up the plan pending start date could do that.

Or do you mean Abbey National Life?

He presumed abbey were taking all the money out as they were with his insurances and ppi.

A presumption that was wrong. It's not the fault of the lender that he made that presumption.

Do we have a leg to stand on in court?

Can't see it because as it stands your father in law is not financially worse off. He has been paying less each month for 14 years.

I have seen the FOS rule with the consumer on a few of these cases in the past but thats when the evidence showed the lender was clearly at fault (e.g. endowment docs issued but premium never collected). In this case, it doesnt seem to have been issued.

Did your father in law get any endowment documentation at all? (mortgage advisers could not do endowments and required a financial adviser to do it. That may explain why just the insurances were done as mortgage advisers can only do those). If he never even got as far as getting an endowment set up but to the waiting for start date stage then he has no virtually no chance of success in court.

halses

sorry my fault it was Abbey National Life.

Abbey set up his endowment and they did start it, they just started it before the mortgage was completed. My father-in-law asked for refunds of the installments he had paid and asked it to be put on hold. at no time did abbey tell him he had to re-start it although his solicitor did put it in the final paperwork that they had to do it.
I appreciate that he is somewhat at fault for not noticing that the money wasn't being taken out but surely it is abbeys responsibility utimately to ensure the policy is started before they finalised the mortgage? In the terms and conditions abbey state that they have to ensure a suitable policy is in force be it with them or another provider.

dunstonh

Abbey set up his endowment and they did start it, they just started it before the mortgage was completed. My father-in-law asked for refunds of the installments he had paid and asked it to be put on hold. at no time did abbey tell him he had to re-start it although his solicitor did put it in the final paperwork that they had to do it.

Ahh, thats key information.

By asking for the policy to be stopped and premiums returned that would have voided the policy. It would have needed to be re-keyed (set up again) and couldnt just be activated by a fax from the solicitor.

It also works against your father as its clear he would have known that endowment was apart from the mortgage and what the premiums were. Whilst he may not have been told he had to restart it, there is the common sense element that he would know he had to restart it if he knew it started too early before.

surely it is abbeys responsibility utimately to ensure the policy is started before they finalised the mortgage?

No. By 1994 lenders no longer required policies to be assigned to them or for them to even have knowledge of what he had running.

In the terms and conditions abbey state that they have to ensure a suitable policy is in force be it with them or another provider.

They still say that today. However, it is not the lenders responsibility to ensure its in place.

And that is what it all comes back down to. It is not the lenders responsibility. Plus, as already said, your father in law is not financially worse off as he has being paying less than he should. He has had the financial benefit of that monthly premium that he hasnt been paying.

halses

You really have been a great help thank you.

Is it not possible though to complain to Abbey that he was not given the information he needed to be able to set up the endowment himself as he didn't do it in the first place.

Abbey have offered £250 goodwill in your opinion should he take it?

NAR

The only area that Abbey apparenty failed on is "In the Abbey paperwork it states that it is up to Abbey to ensure an endowment policy is in force either through them or another provider before they complete the mortgage."
As dunstonh explained above the endowment would probably be worth less than would have been paid in, I would grab the £250 with both hands.