FOS rewards the mis-selling wrong-doers etc.

nadnad

garry - its not just me and mamma - its a whole host of others who have backed off this board because of these two.
their postings are long rambling posts - which fair enough when they post in their own thread - do what they like I don't care - but when they start on other threads, throwing them off course, the OP's aren't getting the clear answers they used to get.

they seem to take great offence if anyone disagrees with them.
they ridicule other posters suggesting they have no experience
many of their posts literally make no sense
the tone of the board has changed - obviously
anytime anyone has tried to lighten the mood we have again been ridiculed and "told off" by roy for being children!!
and the list goes on....and on.... and on

dreamylittledream

Garry_Anderson wrote:

Methinks you take the p*ss.

We will pay at very least - three times our loan amount to the building society (maybe four times) - also they get interest on that money.

How much of that goes towards their wages?

Ah so its mortgages in general you have a problem with.

Sadly the cost of borrowing money is paying interest - or do you think loans should be on a charitable basis?

Garry_Anderson

Dreamer> To be honest I'm slightly curious as to what you are going to call me - or anyone else who disagrees with you for that matter - next!

It was repayment for making out I am wacko conspiracy theorist - you know I prefer repayment method

Dreamer> Incidently the misquote you are looking for is "a pretty straight sort of guy"

Yes - I am just off to bed - badly in need of good nights sleep.

Dreamer> You have yet to articulate an argument for punitive damages as you are clearly unhappy with the principle of 'putting wrong what was right'.

Err.. a crook robs bank and only has to give money back - what sort of justice is that?

Nighty night.

dreamylittledream

Garry_Anderson wrote:

Dreamer> To be honest I'm slightly curious as to what you are going to call me - or anyone else who disagrees with you for that matter - next!

It was repayment for making out I am wacko conspiracy theorist - you know I prefer repayment method

Dreamer> Incidently the misquote you are looking for is "a pretty straight sort of guy"

Yes - I am just off to bed - badly in need of good nights sleep.

Dreamer> You have yet to articulate an argument for punitive damages as you are clearly unhappy with the principle of 'putting wrong what was right'.

Err.. a crook robs bank and only has to give money back - what sort of justice is that?

Nighty night.

You don't need me to make out you're a wacked out conspiracy theoriest - your posts do a perfectly good job on their own.

And continually likening the selling of investment linked mortgages to bank robbery does not a compelling argument make.

Good night

EdInvestor

The problem that Garry has is that endowments did actually deliver what they said they would - enough to pay off the mortgage and provide a surplus cash lump sum - for something like 25 years.

Thus although there was certainly risk involved - and those who were not told about this deserve redress - it was not very apparent to the man in the street.

This risk related to the equity markets, which went through a very long bullish period from the mid 70s until 2001. It was so long that many people in the industry itself got carried away and thought it would never end. This was also a time of much higher interest rates and higher inflation.Thus charges on products like endowments were higher, but this didn't matter because profits were such that they were barely noticeable.

Then came the crash.People in the industry were caught out badly when the boom did end - and ended with a bang.As a result of their failure to anticipate this, their customers also lost out.

Making things worse was that Equitable Life failed more or less simultaneously, and though this was for different reasons, it made the new regulator (the FSA) determine that customer safety had not been properly dealt with in the past.Hence new regulations were brought in which did improve protection - but also caused additional losses in some cases because of the timing.

So here we are now.Does this all add up to a wholesale effort by companies attempting to defraud their customers? Should they be subject to punitive justice?

I personally would argue that in some cases it would be quite helpful if individuals were subjected to a few punitive measures.Equitable Life would be one such excellent example, which might help others to understand that ethical behaviour is not optional.

We see many people in the US jailed for cheating and banned from the industry following the dotcom boom - but it's very rare here.Arguably too rare - it's pretty clear that the industry is quite badly infested with cowboys and companies routinely embrace bad practice - if not actual fraud. Indeed it's built into the system to an extent.

I would also suggest that the FSA should crack down much harder on recalcitrants and repeat offenders - eg Friends Provident, which has already been fined heavily for complaint mishandling and is now abusing the time bar rules.

But it seems very unlikely you could make a wholesale prosecution for fraud stand up in court or even in the public mind.Not least because millions of people have done very nicely out of endowments in the past, and even those who haven't, have profited from rising house prices.

IMHO the main lesson that really needs to be learnt from the endowment debacle is by us, the investors and consumers, not by the industry.

It's this:

Nobody looks after your money like you do.

Closely followed by:

Caveat emptor (Buyer beware!)

and what I say in my signature below.

If you don't trust the industry, then walk away and learn to DIY.

It's not rocket science, no matter how much they may try to bamboozle you into thinking it is.

nadnad

wow - now theres a long post that was informative, clearly written and a well made point. Thanks for that EdInvestor maybe this board will soon be back on track!!

vinno65

EdInvestor wrote:

Then came the crash.People in the industry were caught out badly when the boom did end - and ended with a bang.As a result of their failure to anticipate this, their customers also lost out..

Hi edinvestor agree with your post but can also see where Gary is coming from. You say that people in the industry were caught out badly and their Customers lost out too. But in the case of endowment the industry still wins if endowments fail it is just the customer who bears the cost of failure. The industry still continues to collect charges and commision and if the punter has the temerity to surrender his endowment before maturity he is hit with more punitive charges.

The Fact that early endowments paid out does not detract from the fact that they were still a risk. I would imagine most of these were miss-sold also but because people have not suffered a loss there are no complaints.

As Gary keeps pointing out endowments are not really fit for the purpose of paying off such a massive loan. Suitable as a low risk investment maybe (so long as the risks are still explained to the punter)

They may also be suitable for property investors who want interset only loans but again these are "property investors" by their very nature they are taking a risk, they are nothing like joe public trying to buy a house.

To any of the financial people who post on this board, can you seriously say , hand on heart, that if at the point of sale the risks of endowments were explained fully, if you were told that endowments were not guaranteed, and shown the possibility of a massive shortfall at maturity, that anything other than a miniscule amount of people in this world would be prepared to take the risk?

Gary just 'cos your not paranoid doesn't mean they aint out to get you!

regards Vinno

EdInvestor

Another area we really need to take into account is the awful state of regulation in pre FSA days.

The regulators in the 80s and 90s were appalling - at the very least they were asleep on the job, at worst there is some evidence in some cases of collusion - over Equitable and with the Lautro endowment growth projections, for instance.

There was also little communication - between the different ombudsmen and the regulators for instance.All of this endowment misselling goes back to that time and it was immediately preceded by a massive amount of pensions misselling.The system was a real mess.

IMHO you can't really blame regulated companies for making money out of consumer ignorance, if the regulator says and does nothing and even appears to encourage exploitation. In fact some companies are shown upo in a good light by actually protesting the regulator's behaviour in those days - it's a mixed picture.

At least we now have a better regulator, it's a start. But I can't say this often enough, better informed consumers are the real key to better corporate behaviour in the long term.

Garry_Anderson

Before I continue - let me clue you all in to what has happened - some need it.

Financial Advisors have been left to carry the can - the public think it is Financial Advisors incompetence and greed that caused these problems.

However, it is the financial industry (who have anything at all to do with mortgages) - as a whole - that have been in support of endowments.

Not one person has raised any serious concerns - if they did it was kept quite - not a difficult question; why is that do you think?

So - it is totally wrong to suggest that it is only Financial Advisors to blame.

I even have documentary evidence that the top management of our building society was very keen that we should get one - so I knew it wasn't just maverick advisors when starting protest.

It is total lies to just blame rogue IFA's.

Some people have been misleading others as to the purpose of endowments.

Endowments: purpose = repay massive loan WHICH IS DIFFERENT FROM inducement = an extra cash sum at end of term.

We know conmen use inducements to defraud gullible and trusting people.

Let us pretend - just for one tiny moment - that every person in finance industry really believed that endowments were 'fit for purpose' - this is pretend remember.

After all, flip knows how all these 'experts' could think that the markets would never go down and leave people approaching old age without enough to repay their large house loan.

Anyway - how many years did the finance industry let it continue - once they realised that endowments were unfit for purpose - that "markets go down as well as up" and later on, all the other changes that IFA's have been on about - before they told the public that endowments were not fit to repay their loans?

I include in that statement the Financial Services Authority and the Serious Fraud Office - both have statutory duty to protect the public from such financial wrong-doings.

Before some get their knickers in a twist - even the head of SFO couldn't deny that it was fraudulent - that is documented fact.

So - how many years did they let it all continue?

The actual truth is this: the finance industry have always known endowments were 'unfit for purpose' - they only warned people when they were about to be found out.

Then they said, "Let's blame it on just those rogue Financial Advisors that wrongly advised people it was worth taking a risk. We can pretend endowments are good 'investment vehicles' for people who want to take risks - so as not to implicate ourselves in any wrong-doing. Don't say anything about endowments not being fit for purpose though - whatever you do."

How is any of that wrong?

I will get back to you this afternoon - sorry for delay

homer_j_3

Garry, EdInvestor has been making some points which in my opinion are valid and balanced and you have failed to respond to them, you have just started "clue'ing up" those that might take Eds point on board which detracts from your point of view.

You sound like you are the only authority in this by this tone and it is this tone that got peoples backs up last time.

I have agreed with you in terms of your logic does seem sensible. However I believe that it wouldnt be too difficult to place logic to any situation if you are convinced that your theory is correct.

I asked you a question about what you thought would have been the situation without the FOS and you did not answer this. You just bounced the question back - it doesnt matter what my thoughts are, I just wanted to know what you thought should have been done in the absence of the FOS and how it could have been handled to your liking.

I think you should stop with the " let me clue you up" attitude and deal with the points that have been raised. I am not looking for an argument, just sensible posting.