FOS rewards the mis-selling wrong-doers etc.

Garry_Anderson

Garry_Anderson wrote:

"When exactly is endowment mortgage GOOD FINANCIAL ADVICE?"

EdInvestor wrote:

Before 1983, when endowments attracted tax relief, they were probably OK.AFAIK all endowments from that period with LAPR have paid off the mortgage, but if anyone knows different,please post.

Thank you very much Ed - I am most grateful

We got our endowment at the end of 1986 - much later than 1983.

The defence counsel of our crooked building society will be looking to find somebody as expert witness for court of law to answer that question.

You are the first to answer it - but unfortunately it would not help them.

I assume you understand the purpose of mortgage loans and the enducement used to make people choose the endowment method.

The building society need to find somebody to testify under oath that endowment mortgages were good financial advice and fit for purpose to repay the loan in 1986.

I see Dunston cannot answer the question - which is a pity.

EdInvestor

It's probably not quite that simple, Garry.If all endowments pre 1983 were probably OK, it doesn't necessarily mean that all endowments after that date were not.

You would need to look at the growth rate the policy needed to achieve to pay off the mortgage, and also the investment policy of the insurer's With profits fund.

One suspects that a low growth rate (eg around 4%) and a conservative investment policy (eg say 50% or less in equities and property) should have meant the endowment would be on target (but this is only a "back of the envelope" calculation.)

The trouble really arose when the companies starting using projections and growth rates that were too high ( this would mainly have been from 1988 onwards when regulation came in, amazingly enough :rolleyes: ).

Do you have this info about your policy? A growth rate of say 8% combined with a WP fund 75%+ in equities was obviously asking for trouble.

Yours is in the 1983-88 "grey area" so it could go either way.

Garry_Anderson

I was being somewhat one-sided in not giving the counter argument to your post Ed

Even if the AVERAGE growth over most the 25 years is quite good - it only takes a decline in later years for the policy not to repay loan.

This is a fact that can be seen from recent events - which financial experts knew.

The point being - endowment isn't fit for purpose unless it would repay loan - our repayment mortgage (that they churned us and other customers from) was fit for purpose.

The damages from churning runs into many thousands - and we are just one of this corrupt building society customers.

EdInvestor

Even if the AVERAGE growth over most the 25 years is quite good - it only takes a decline in later years for the policy not to repay loan.

As I said it's not that simple - otherwise all endowments would be in shortfall, which isn't the case.

The building society need to find somebody to testify under oath that endowment mortgages were good financial advice and fit for purpose to repay the loan in 1986.

Maybe you could post some details of your endowment and we could see how it measures up.

For instance what was the guaranteed sum assured compared with the target amount?

[Edit: I see from your website it was a Guardian unit linked policy. Wasn't this policy past the target amount by around 2000?]

jeppy

I thought that it was the financial advisers who were being sued, not the buiding society/insurance co.

I think this is wrong as it is the insurance company who gave the figures.

I know a retired person who could lose everything and he has done nothing wrong, he gave people various options, some chose a low cost endowment, which was the cheapest and these are those who may or may not have enough to pay off the mortgage, but how many have had windfalls during the period of insurance??

He is not a crook he was giving the best possible advise. At the time interest rates were high.

EdInvestor

jeppy wrote:

I thought that it was the financial advisers who were being sued, not the buiding society/insurance co.

I think this is wrong as it is the insurance company who gave the figures.

You sue/complain to whoever sold the endowment to you. In this case it appears to have been the Woolwich BS,as was.

He is not a crook he was giving the best possible advise.

That's what they all say. In any case, advisors are not affected if the complaint refers to sales pre 1988, when regulation came in.If he broke the rules after that, he only has himself to blame.

jamesd

Garry, just to be clear, you're arguing that it is impossible for an ISA or other interest-only mortgage backed by investments to be anything other than mis-selling because the stock market can go down as well as up?

dunstonh

jamesd wrote:

Garry, just to be clear, you're arguing that it is impossible for an ISA or other interest-only mortgage backed by investments to be anything other than mis-selling because the stock market can go down as well as up?

That is how I read his views to mean.