Thanks MSE £5k up - What next?

MVC

Less than a month ago I phoned YBS complaints department for endowment mis-selling.

Filled in simple form, did a bit of digging to find Policy No.s etc, got a letter today offering just short of five grand.

Just need advice on how to make best use of it - the mortgage (29k) had 16 years left to run. There will be a shortfall.

homer_j_3

So they have made you an offer of nearly 5k? What will the policy still be short by?

How do you intend to fund this shortfall?

It was always my impression that if the policy was mis-sold then they have to put you back in a position so you will not have a shortfall. (my knowledge of this side of things is fairly small compared to some on here)

I would not accept the offer yet and wait for one of the IFA's or investment/endowent experts to come along and shed some light on it for you.

Froggitt

£29k mortgage, £5k compo.......sounds unlikely......possible but unlikely.

Compo does not put you back in the position so you do not have a shortall.....if puts you back in the position you would have been in had you taken a repayment mortgage.

Why not use the £5k to reduce your mortgage by that amount.

They are unlikely to increase the offer if they have used the standard calculations.

MVC

Thanks for the replies....

5k suprised me too - I'm not complaining.....

Correction - mortgage has 12 years to run - so halfway point for us.

The calculation uses the current surrender value - v - how much a repaymeny would have reduced the total amount by. They also factor in an adjustment because endowments are a bit cheaper than repayment would have been.

The projected shortfalls are:-

4% 12K, 6% 8k or 8% 3k

If the fund doesn't achieve 6%PA from 2000 until maturity (2018) there is a 5k Promise to Policyholders. If the fund achieves more than 6%PA they will top up the fund to guarantee no shortfall.

I haven't got a clue how the fund is performing or how likely it is they will achieve 6%+ but it is the regulator's mid-range prediction - the insurance co agree this is appropriate.

The insurance co must give us 3 years warning if they think the promise can't be kept.

I need to decide what to do about the remaining 12 years of 29k outstanding. Should I lump the 5k off it and carry on with endowment. Freeze endowment, pay 5k off, swap to repayment (YBS say they will pay any costs for this).

One other factor is that I aim to pay off all of my mortgage with other funds well before 2018 - so I'm not relying on the endowment per-say.

YorkshireBoy

I too have been paid compensation for endowment mis-selling by YBS earlier this year. My £38k, 25 year policy (£58 per month with Clerical Medical) had been running for just under 12 years, had a surrender value of around £7.5K, and had a projected shortfall of £8.8K at 6%.

I was paid £2,800 in compensation (a figure I agreed with, having had the calculation method explained to me).

For what it's worth, I plan on keeping my policy running to maturity - even though I don't *need* it (my mortgage will be paid off next year, 12 years early, as a result of making overpayments, other investments maturing, and using some of my savings).


The OP's offer seems very, very good - and I must admit I'm not sure why it's as high as it is. Maybe one of the experts will tell us?

dunstonh

For what it's worth, I plan on keeping my policy running to maturity - even though I don't *need* it (my mortgage will be paid off next year, 12 years early, as a result of making overpayments, other investments maturing, and using some of my savings).

Although we dont have specifics about your endowment, its probably a bad move. CM with profits fund isnt the worst but its certainly not one I would want to be in. I recommend you get your policy reviewed because with this one, you could be throwing good money after bad.