FOS rewards the mis-selling wrong-doers etc.

vinno65

Hi Homerj,
I would like to answer your questions as regards the FOS (Gary will be back later I believe!!)

In the absence of the FOS the consumer would have only one course of action against firms who they believe had handled their complaints unfairly, and that would be court action. As my case against FP proved this might not be such a bad thing. Their red letters were tested and failed and also how they calculated redress was also tested and failed. The FOS however had previously upheld FP's argument on both counts.

My problem with the FOS (and I agree it has a place) is that it was put in place to stop the need for court action hoping that complaints resolution could be arbitrated. It spouts on about what is fair and reasonable yet comes to decisions that flies in the face of the law. How can this be fair? Why are they still posting case histories on their web site yet coming to the opposite decisoins (think endowments into retirement)

Will they now in the light of my court victory scrap the original time bar letters and re-investigate the 700,000 or so cases that were time barred under this ridiculous rule? This is after all what the House of Commons Treasury Committee was looking for in it's 2004 report. Unfortunately the FSA/FOS changed the rules but did not make it retrospective! Fair Reasonable? after the rule change FSA spoespeople offered soundbites that they hoped firms would look favourably on previously time barred complaints and re-investigate them. That's like asking a fox to look after your chickens!!
I have yet to hear of a case where a firm has re-investigated a previously time barred complaint (unless threatened with court action)

Aother point about the FOS. John Tiner wrote to all the CEO's in 2002 making various points as to why he was not happy with how they had handled complaints up to then. They're now known funnily enough as the Tiner Points.
One of them states that verbal evidence from a consumer should be treated as good and sufficient evidence.This was especially relevant as to verbal guarantees given at the point of sale. Why is it then that the FOS will not accept what a complainant says they were told verbally without documentary evidence? Again going back to my court case one of the points was on th verbal advice I had been given at the point of sale, the judge accepted my version of events without documentary proof.

So the FOS does have a place so long as it arbitrates in a fair and reasonable manner with due regard to the laws of the land. When you look at some of the decisions they have made over the last 5 years it does not take a great leap to move over to Gary's theory on what is going on. I wouldn't even call it a conspiracy theory, I believe some of the rules and decisions have been arrived at for the benefit of firms by pressure brought to bear by the same said firms.

You might find that a judicial review is the only answer and I for think this could be on the way

regards Vinno

EdInvestor

Garry

Not sure that people normally blame "rogue IFAs" do they? Most endowments were (mis)sold by tied agents AFAIK, you can see just from this forum that the majority of complaints are going either to the insurance company or the bank/BS which sold both the endowment and the mortgage.

Vinno

So the FOS does have a place so long as it arbitrates in a fair and reasonable manner with due regard to the laws of the land. When you look at some of the decisions they have made over the last 5 years it does not take a great leap to move over to Gary's theory on what is going on. I wouldn't even call it a conspiracy theory, I believe some of the rules and decisions have been arrived at for the benefit of firms by pressure brought to bear by the same said firms.

This is extremely obvious in the case of Equitable Life, a disgraceful affair.

You might find that a judicial review is the only answer and I for think this could be on the way.

It nearly happened from the other side - one of the BSs was very angry about a FOS decision ( about Tessas IIRC).As long as that happens, one might not be so concerned, the FOS really needs to make sure at all times that if one side is annoyed, then so is the other.

At the moment the balance seems to be swinging too far to annoyed customers putting the FOS's credibility at risk.

homer_j_3

Vinno - some good points raised which I believe will be of benefit to the forum.

I believe that if you and Ed have a discussion about it, it would make an interesting read. I am sure Garry would have a wealth of contribution too, if he can keep the tone away from his previous posts on this.

With regards to court action, is this a route open to anybody who has had their claim refused? If so or if to some and not others, why not concentrate a post and the efforts of your and the other experienced individuals on educating people on what people can do. I know that the legal world is a scary place but I am sure there is something more productive?

Garry_Anderson

Sorry for delay - this is only flying visit - may not be able to get back till tommorrow (my deepest apologies to everybody).

Garry Anderson> the crooks charge you for their services

Dreamer> No they didn't...their commision was factored into the cost of the endowment, which is included in the cost and comparative reduction in capital between an endowment and repayment mortgage. If RU89 (the official name for endowment mortgage redress) is carried out correctly, you have not lost out in anyway by having an endowment mortgage providing your surrender the policy and the the policy value and the redress to pay off a lump sum off your mortgage and convert to repayment.

I know some want to pretend it is only rogue advisors - but it is not - as noted in my previous post.

They are merely the agents for those that make the big money from the victims of this crime.

I am not talking just about commision - but all the other charges that finance company got for 'managing' your account e.g. salaries and profits.

GA> Because they would have not repaid at that rate and would be on track for completion in time.

D> You're really not getting how this works are you?

Err.. I think you will find I do.

The lender is caught being short many thousands at the end of endowment when they would not be had they been paying into repayment scheme i.e. they now have to find lot of money for completion.

GA> If you robbed a bank and were caught - you would not expect just to give the money back and walk away - would you

D> And you are being compensated by being put back into the situation you would have been had you not been given incorrect advice. You haven't proven corruption or malicious intent at all have you?

Not even the Serious Fraud Office could disprove the charges - and you think you stand half a chance

1. Had the people tried to make financial gain from trying to sell product that was not 'fit for purpose' of massive loan repayment?

Please - no BS trying to conflate purpose and inducement.

Can you disprove number one.

GA> Contrary to the BS propaganda that endowments could have repaid loans - the losses could actually have been worse - it was unfit for purpose.

D> We had this discussion at length in the other thread and calling everything BS does not make your argument any stronger.

Be fair - I only call it BS when at its most blatant

D> The large number of mortgages that were paid off with a surplus rather destroys this particular line of argument.

That a large number were LUCKY does nothing to dismiss the fact that "the losses could actually have been worse"

GA> The redress in ALL cases is BS.

D> No its not - it confirms the basic principles of law.

Here is the definition:

redress n 1: a sum of money paid in compensation for loss or injury [syn: damages, amends, indemnity, indemnification, restitution] 2: act of correcting an error or a fault or an evil [syn: remedy, remediation] v : make reparations or amends for; "right a wrongs done to the victims of the Holocaust" [syn: right, compensate, correct] [ant: wrong]

The FOS only put people back in the position they would have been had they paid the same amount into repayment mortgage i.e. not what they actually would have paid.

The FOS completely ignore compensation for mental anguish, churning, that people would be in much better financial position at that time with repayment scheme, etc.

The FOS completely ignore the fact that that others have profitted from the wrong that their agent has done.

Nobody has paid a penalty for their wrong doing - what exactly is their punishment?

See you tommorrow

vinno65

homer_j wrote:

With regards to court action, is this a route open to anybody who has had their claim refused? If so or if to some and not others, why not concentrate a post and the efforts of your and the other experienced individuals on educating people on what people can do. I know that the legal world is a scary place but I am sure there is something more productive?

Hi Homerj.
Yes this route is open to anyone. But you need to have an actionable claim i.e. someone has done you wrong and you have lost out as a result. However, and I know this to be fact, many of the large firms refuse to even investigate a complaint if they deem it out of time. They are backed up in this by the FOS who's rules on juridiction mean they won't look at a complaint more than 3 years after a red letter. The complainant is then left in limbo being told by both the firm and the FOS that they are out of time. In fact they are only out of time for referring their complaint to the FOS. They are not time barred necessarily from a court of law. But how does the complainant know they have an actionable complaint if the firm refuses to investigate? You could't make it up!
The reason I believe that some firms are doing this is because of the appalling state of their records. They realise that if they do investigate a complaint they are unlikely to be able to prove it was a compliant sale and thus it becomes a miss-sale by default. The complainant can then if they like take their case to court where as in my case the firms only defence will be that the complaint is time barred under the Limitations Act 1980. Now this act is a lot more detailed than the FOS jurisdiction rules. In my case the firm argued in court that the complaint was time barred by virtue of my first red letter. The FOS would concur with this but the court did not, it does not take such a simplified view as the FOS rules.
The Firms are scared of this and the ambulance chasers are close to trying this out in court aswell, so there may be trouble ahead!!
regards Vinno

homer_j_3

sounds very interesting.

But how does the complainant know they have an actionable complaint if the firm refuses to investigate? You could't make it up!

Would there be any reason for not being allowed to chase through small claims court? Providing its not over 5k, you cannot be held accountable for any legal fees if you lose and the claimants costs are likely to be no more than 250 on 5k. Limitations act may stop some here so not sure?

Surely if you were to claim that this person owed you x amount, surely they will have to defend and prove why they didnt owe it you. If they cant defend or prove otherwise, you win?

Might be talking rubbish here, but I know thats what they are doing with bank charges.

dreamylittledream

Garry - Oh for heaven sakes - circles in circles in circles again...

I know some want to pretend it is only rogue advisors - but it is not - as noted in my previous post.

They are merely the agents for those that make the big money from the victims of this crime.

I am not talking just about commision - but all the other charges that finance company got for 'managing' your account e.g. salaries and profits.


Sorry I missed the bit when I ever pretended it was all 'rogue' IFAs. As I'm sure dunstoh will confirm, the majorty of complaints are upheld against tied agents for life companies and bank/buiding societies.

IFA complaints make up a fairly small part of the over all number - largey becuase most policies were sold by 'tied' advisers.

All the charges and costs of the endowments are factored into the cost comparison on a RU89 calculation - this is the financial loss full stop.

Err.. I think you will find I do.

The lender is caught being short many thousands at the end of endowment when they would not be had they been paying into repayment scheme i.e. they now have to find lot of money for completion.


No you really don't do you? The borrower is not caught short if a policy was miss-sold becuase the redress plus the surrender value of the policy will return them to the position they would have been had they been given correct advice - i.e a repayment mortgage.

In fact most will be better off - as an endowment mortgage will generally (particularly in the last few years) have been significantly cheaper then a repayment mortgage - yet this cost saving is not subtracted from the redress offered (unless the compensation has been worked out by the FSCS of course...)

If the endowment was more expensive then this additional cost is also refunded as part of the redress.

Not even the Serious Fraud Office could disprove the charges - and you think you stand half a chance

1. Had the people tried to make financial gain from trying to sell product that was not 'fit for purpose' of massive loan repayment?

Please - no BS trying to conflate purpose and inducement.

Can you disprove number one.

If you'd like to provide me with a statement from the serious fraud office that says that the sale of endowments was always fraudulant then maybe the above make be a little more compelling.

I've no desire to rehash the 'fit for purpose' argument - suffice to say we disagree?

Here is the definition:

redress n 1: a sum of money paid in compensation for loss or injury [syn: damages, amends, indemnity, indemnification, restitution] 2: act of correcting an error or a fault or an evil [syn: remedy, remediation] v : make reparations or amends for; "right a wrongs done to the victims of the Holocaust" [syn: right, compensate, correct] [ant: wrong]

The FOS only put people back in the position they would have been had they paid the same amount into repayment mortgage i.e. not what they actually would have paid.

The FOS completely ignore compensation for mental anguish, churning, that people would be in much better financial position at that time with repayment scheme, etc.

The FOS completely ignore the fact that that others have profitted from the wrong that their agent has done.

Nobody has paid a penalty for their wrong doing - what exactly is their punishment?


So that would be definition 2 then.

RU89 does address what was actually paid - if people would have had a repayment mortgage originally (over the same term as the endowment - incorrectly recommended terms is quite another issue) they generally would have paid more! If they have paid more of the endowment method then this will form part of the compensation!

Churning has its own form of redress in addiitonal to the cost and capital comparison - if this has not been calculated correctly bythe selling agent then the case should be referred to the FOS (who on current experience will uphold the churned issue).

Unless you can prove maicious intent - which you haven't, then punitive damages are not awardable under UK law.

dreamylittledream

EdInvestor wrote:

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.

Good points - I would agree with you on the Equitable Life point.

Also the FSA should be taking a more active stance on dealing with poor handling of complaint - as Vinney has pointed 4 years on from Tiner there a number of large firms who adopt the reject first and hope the consumer does not appeal to the FOS approach to endowment redress.

Amongst the worst offenders Barclays (on pretty much everything pre 88), Winterthur Life (ditto but also on a lot of post A day sales, depsite fact finds that didn't even capture attitude to risk) and Halifax (on a lot of Halifax IFA sales and a large percentage of pre A day cases). This is shown by firms upholding claims once the case referred to the FOS even before the adjudicator has even considered the case!

Its probably worth making my own view clear again - the financial services industry has done itself few favours over dealing with endowment claims, and I am no great admirer of the current approach of the FOS.

For example: the Ombudsman states "If a firm has made an offer of redress you can be assured it will be correct". Aside from the issue of human error in calculations, this would be the same firms that reject complaints of which 60% of which are subsequently upheld by the FOS. Not all that reliable then?

Approximately 1 in 5 offers of redress do not comply fully with RU89/72/75 and the DISP guidelines (mainly retirement issues but a multitude of others also). The FOS's increasing refusal to address these without some serious 'encouragement' is not at all reassuring.

This is as much due to volume of the work being referred to the FOS but it does not excuse the hardening of their attitude. Furthermore the point is that if selling agents treated complaints correctly, the FOS workload would be much smaller!

This however is not the same as suggesting that the whole sale of endowments was a corrupt and fraudulant affair in its entirity - sorry Garry but your argument goes too far and the popularity of endowments and the subsequent fall out is a far more complex situation then you would like to state as fact.

dreamylittledream

vinno65 wrote:

Hi Homerj,
I would like to answer your questions as regards the FOS (Gary will be back later I believe!!)

In the absence of the FOS the consumer would have only one course of action against firms who they believe had handled their complaints unfairly, and that would be court action. As my case against FP proved this might not be such a bad thing. Their red letters were tested and failed and also how they calculated redress was also tested and failed. The FOS however had previously upheld FP's argument on both counts.

My problem with the FOS (and I agree it has a place) is that it was put in place to stop the need for court action hoping that complaints resolution could be arbitrated. It spouts on about what is fair and reasonable yet comes to decisions that flies in the face of the law. How can this be fair? Why are they still posting case histories on their web site yet coming to the opposite decisoins (think endowments into retirement)

Will they now in the light of my court victory scrap the original time bar letters and re-investigate the 700,000 or so cases that were time barred under this ridiculous rule? This is after all what the House of Commons Treasury Committee was looking for in it's 2004 report. Unfortunately the FSA/FOS changed the rules but did not make it retrospective! Fair Reasonable? after the rule change FSA spoespeople offered soundbites that they hoped firms would look favourably on previously time barred complaints and re-investigate them. That's like asking a fox to look after your chickens!!
I have yet to hear of a case where a firm has re-investigated a previously time barred complaint (unless threatened with court action)

Aother point about the FOS. John Tiner wrote to all the CEO's in 2002 making various points as to why he was not happy with how they had handled complaints up to then. They're now known funnily enough as the Tiner Points.
One of them states that verbal evidence from a consumer should be treated as good and sufficient evidence.This was especially relevant as to verbal guarantees given at the point of sale. Why is it then that the FOS will not accept what a complainant says they were told verbally without documentary evidence? Again going back to my court case one of the points was on th verbal advice I had been given at the point of sale, the judge accepted my version of events without documentary proof.

So the FOS does have a place so long as it arbitrates in a fair and reasonable manner with due regard to the laws of the land. When you look at some of the decisions they have made over the last 5 years it does not take a great leap to move over to Gary's theory on what is going on. I wouldn't even call it a conspiracy theory, I believe some of the rules and decisions have been arrived at for the benefit of firms by pressure brought to bear by the same said firms.

You might find that a judicial review is the only answer and I for think this could be on the way

regards Vinno

Timebar is a disgrace to the FSA and indeed legislation. The alteration to the rules (requiring the firm to state the date rights to complain explain expire) should have been made retrospective and the very thought of the 2000 'red' warning letters being relied on to timebar is enough to make the blood boil (if a consumer accepted the letters option to 'wait and see', why should their right to complaint expire?).

Mind you Zuirch have attempted to use late 90s policy review letters to timebar, (these would be the same letters that offered no options at all and automatically increased premiums - thus 'guaranteeing' policies would make target). Thankfully the FOS and FSA have ended this practice (for now...).

Providing an endowment case can escape the 15 year long stop rule in law (which will be shortly be affecting a majority of policies) then recourse to the courts would appear to be the only hope.

One can only hope that judicial review does take place, or test cases on time bar are taken to the High Court - where precedent can be set...

EdInvestor

What do you think about the role of complaints handlers dreamy? ( Pity Defender of the Weak isn't here to comment).

If they were to develop a bit and get a bit more volume, thus bringing their prices down, it seems to me they they could be very useful as a brake on bad practices.