Endowment timebars: Court breakthrough

EdInvestor

THe Guardian has some useful info on how to use the court route, how much it costs, etc.

vinno65

Hi All,
I now have a copy of the judgement so i'll paraphrase some of the more relevant points

On the timebar (remember FP tried to have the whole of my complaint thrown out of court as statute barred)

"Obviously what we are concerned with here today is to look at the Limitations Act of 1980: is the claimant barred in law from making this claim.We have to go to the law itself" (the judge then read the relevant passages from the Act, making reference to the 6 and 3 year rules which I'm sure you are all familiar with)

She goes on " It seems to me, to summarise that, he has in effect three years from the date upon which it first becomes known to him that there had been negligence and that he was going to suffer a loss. It is from that point."

So the judge has discounted the 6 year rule and the case hinges on when did the clock start ticking?

"Of course, the argument today has been on "Well, when does that run from". The defendants say,well,it has to be the letter that was sent to him, the first warning letter that was sent to him on 8th August 2000. They say that it was adequate. They indicated at that particular point in time that the endowment policy was not possibly going to hit target. With all due respect to the defendants, I do not think that in itself it is adequate. I believe it is a warning letter, but it does not say in that letter that there is a possibility the the claimant or the other customers that they were sending this letter to, could have been miss-sold a policy.Not just that it was not actually going to hit target that did not come till a lot later."

" The Claimant took preventative action. He increased his plan, and he therefore mitigated against any potential loss, and this did not alert him to the possibility he been miss-sold a policy. There was alot of publicity by the government a this time. There were rising concerns.I think it is very helpful to look at the note by the Parliamentary Select Committee on the 25th of February , were they say the benefit should be given to the consumer. They welcomed the way in which the Legal and General had approached matters, and they recommended that they should not use time limits to rule out complaints"

"It is interesting that following that , various red-letters went out from various insurance companies. In fact that was exactly what FP did themselves. They sent that and of course they were fully aware of the ongoing complaint that the claimant made."

"However leaving that aside, looking at the actual evidence said here today, the first date it appears to me that the claimant becomes aware that he has been miss-sold is in Septmenr 2002 whan at that point he was in the process of changing his mortgage."( I had argued that it was at this point that my new building society advisor told me I probably had good grounds for complaint, my initial complaint letter to FP was a month later)

On the point that the Ombudsman upheld FP's time bar on the fact that I knew that the endowment was for 25 years from the outset. I had argued that I had asked for a 22 year mortgage and been sold a 25 year endowment on the advice that I could cash it in early.(This has bearing on how the FOS is now handling cases of endowments sold into retirement)

After being time barred by both FP and the FOS I went to the independant assessor(who ovelooks the FOS) He found in my favour (and fined the FOS) but does not have tthe power to overturn a FOS final decision, which is why I ended up in court.

The Judge's take on this was " For what it is worth I think the independant assesor's conclusion was in the realm correct. He considered the Ombudsman was wrong in rejecting a Claimant that was out of time, on the basis and I think I would agree, it is probably an abuse of process, looking at the regulations."

The judge however has no power over what the FOS does and so had to make her own decision as to whether I should be redressed using a 22 year repayment or a 25 year payment.

On this she says " The respondants say that because of the terms of the mortgage, compensation must be based on a 25 year term, not a 22 year term, as the claimant knew all along it was a25 year term. He had all the information he needed. I do not accept this contention on its own. The fact is, the claimant did not realise a loss would occur if he surrendered the policy early due to the ballooning effects and the way in which these policies work. The benefits are attached rather late in the term of the policy. I would guess there would have been very considerable loss, had he done that."

"In order to consider the right level of copensation, we have to consider what is being compensated here. First of all, what was the Respondant's duty of care. Has that duty been breached, and what loss arises."

" Well the FP agents or representatives (it was not off course the defendants themselves who first advised the claimant) had a definite duty of care. I believe they breached their duty on two counts, the first being that they miss-sold the policy in its entirety by miss-selling it , rather than a repayment mortgage. However the second, and most significant breach, is that they failed to advise the claimant of the penalties for surrendering early."

The judge went on to award me redress based on a 22 year term.


A lot to take in but what I think the judge is saying is that the early red letters do not start the clock ticking. Especially as in my case if you took action on reciept of the letter, be it increasing premiums, paying off a lump or converting to repayment. You could also argue though that to "wait and see" was a valid course of action as this advice was also offered in these initial letters.

The judge also put some prominence on the House of Commons report. Basically that it would be unfair to impose time limits on the basis of this letter. It was this report after all that prompted the rule change in 2004(though it was not retrospective) The judge noted it was interesting in the change of red letters after this point. I even recieved one from FP in Nov 2004. This interested the judge is so much as it seemed to show that even FP did not believe the initial red letters started the clock ticking, or why send more out in 2004?

Also we can see from this judgement that the judge believe the FOS are getting things wrong on redress. At present a firm can uphols a complaint about miss-selling, but if the endowment was sold to mature into retirement, even if they can't prove that enquiries were made to see if it would be affordable in retirement they still calculate redress on the basis of standard 25 year repayment mortgage term. What they should be doing is calculating redress based on the persons retirement age, as obviously compliant advice would be a repayment term to finish at retirement. These people were sold endowments in the smae way that i was i.e. that they could be surrendered early(at retirment) and still pay off your mortgage. However if a firm raises a time bar on this aspect (on the basis that ,like I was, the complainant was aware from the outset of the 25 year term) then the FOS upholds the time bar and people lose out on £1000's of redress. As the judge said this appears to be an abuse of process so will the FOS now change how they handle these type of complaints?

Sorry for the long winded post but I'm sure you all find it interesting.
I apologise for typos and poor grammar but I am not going to proof read it!!

regards Vinno

EdInvestor

vinno65 wrote:

Judge's comments: " I believe it is a warning letter, but it does not say in that letter that there is a possibility the the claimant or the other customers that they were sending this letter to, could have been miss-sold a policy. The Claimant took preventative action. He increased his plan, and he therefore mitigated against any potential loss, and this did not alert him to the possibility he been miss-sold a policy.

"However leaving that aside, looking at the actual evidence said here today, the first date it appears to me that the claimant becomes aware that he has been miss-sold is in Septmenr 2002 whan at that point he was in the process of changing his mortgage."

The Judge's point seems to be that there is a clear difference between being alerted of a shortfall, and becoming aware of a misselling event which would trigger a complaint.

The second does not necessarily follow from the first. [And of course as we know, they are not connected: a shortfall is not grounds for a misselling complaint.]

Looks to me she has basically ruled any timebar which is based on a red letter offside.

vinno65

Quite agree but what are the FOS going to do about the 700,000 or so time barred by these original letters.

Vinno

SAM

I am new to this chat forum and have read with great interest all your comments about the dreaded time-bar. My insurance company (originally Royal and Sun Alliance but now Phoenix Life) agreed they had missold me a policy but said that, because I would have paid more had it been a repayment policy, I was not entitled to anything. They said I had six months to complain to the FOS.

Feeling completely deflated and that I wouldn't get anywhere with a big organisation, I forgot about it until the media started going on about it again. Unfortunately, this was after my six months had run out and though I complained to the FOS they now won't consider my case because of the time bar imposed by my insurance company.

Would I be able to take this kind of case to court? Grateful for any advice.

matto

SAM - the compensation is designed to put you in the same position you would have been in had you taken out a repayment mortgage. In your case when the decision was made you were better off than if you had taken out a repayment mortgage. So if you surrendered your policy then, converted to a repayment mortgage and used the surrender value to pay off part of your mortgage you would be better off than having been on a repayment mortgage all along.

So what is it that you wish to complain about?

EdInvestor

SAM


How long ago was this?

If it was before around 2000, it's unlikely you suffered a loss.

EdInvestor

http://www.thisismoney.co.uk/mortgages/endowments/article.html?in_article_id=409069&in_page_id=55&ct=5


Vinno's case reported yesterday in the Mail on Sunday.

Good to see the complaints handlers have picked uo on the Friends Provident problem :mad:

vinno65

Hi Edinvestor,

Yes I think they are. Defender of the Weak has been in touch with me I've relayed all my documents to him as I have to three of the other major players in claims handling. I have also recieved an email from the journo that ran my story saying there is huge interest in this but it is all behind closed doors at present. I am now just about to talk to Which who also want their lawyers to look at my court documents so as the saying goes "watch this space".
By the way Defender of the Weak I now have a copy of the judgement if you would like one get in touch.

Regards Vinno

vinno65

Further to my last post,

The mail on sunday have actually been in touch now with a view to doing a piece about time bars and the Limitation Act, the Observer journo has told me she is doing a follow up this week, apparently a lot of lawyers are now very excited about the implications of the case, and Which (I know they might have had a hand in inadverdently creating the time bar fiasco) are also now on board with a view to publishing details.
Who knows perhaps there's hope for anyone time barred pre june 2004 when the new rule came in, why this wasn't made retrospective is beyond me anyway. Hang on a minute pre june 2004 700,000 time barred. Lets say 150,000 of them have been mis-sold and are deserving of redress, at an average of £5000 that works out at £750,000,000 conspiracy theory anyone??

regards Vinno