FOS rewards the mis-selling wrong-doers etc.

Garry_Anderson

Ed> There is one area where IMHO Garry's view on "not fit for the purpose" can be shown.This is related to the risk of choosing an equity-based product to pay out a fixed cash amount at a given point in time in the future.

Err.. isn't this is what mortgage endowments are Ed?

Ed> We all know that equity markets routinely demonstrate short term volatility, so there is always a risk that a major crash can occur just before the payout date.This risk usually hits the policyholder but can sometimes impact the insurance company first. This risk should be explained to policyholders, but it never is ( ask yourself why).

I used example of risk of crash or long term decline just before the payout date in communications with the authorities myself.

Ed> It's extremely apparent that not only did managements NOT follow these principles at many companies, but that regulators - who should have been monitoring managements - didn't take a blind bit of notice.

Been saying the same myself - about those with statutory duty to protect public (FSA and SFO) - like coppers turning a blind eye.

Ed> So bad was it that anyone who is well informed about what happened would think very carefully indeed about ever committing money to be invested by such useless and irresponsible people ( many of whom are still in their jobs) ever again.

What - and let them get away?

They were either conning people or criminally negligent - making money in the process.

It resulted in millions of people going well short on their large loan repayment - and you want them to go free and allow them to handle more trusting peoples money?

Garry_Anderson

Vinno> Let's remember here if you don't pay off your mortgage at the agreed time what's to stop the lender repossesing?

Also remember - people will finally be paying off their mortgages when nearing retirement - when they should be saving for old age - not a big pile of money to REPAY A LOAN.

V> You could argue that endowments are fit for purpose as a savings vehicle for people prepared to take a gamble with their money for bigger returns(again so long as the risks are explained bottom line being you might get back less than you put in). I don't think (Dunstonh) that Gary has ever disputed this.

I would call it stupid and bad financial advise to bet that interest on loan repayments are lower than stock market rises - wouldn't you?

It would also mean that you would have to have the cash available if market goes tits up.

However - this is betting money that is your own (if you know you will have the cash spare to repay it) - NOT WHAT YOU WILL OWE SOMEBODY.

V> He has also never said that investing is bad. He actually admits to investing in stocks himself!

Yes - this is contrary to fact that the FOS use the corrupt excuse that somebody is not 'risk averse' to deny them redress - the money I am betting is mine - not what I owe somebody.

Isn't it strange how so many people have not got the brain to figure the difference?

V> But what my case shows is that the early time barring has no place in law.

The police can't say to shopkeeper (victim of protection racket), "Sorry sir - even though you are still paying, you signed the agreement with them ten years ago - so you cannot bring charges against them".

Any statute on limitations would start from when the 'wrong' has stopped.

EdInvestor

Hi Garry

Our current system doesn't regulate the products that can be designed and sold. It regulates the sales process itself.

There's nothing to stop a company designing products aimed at different risk levels -from highly speculative to very safe, this is quite normal.

What they (or the product distributors, aka IFAs) musn't do is get the match between the customer's level of risk and the product's level of risk wrong.

If you think the system is wrong and needs restructuring, fair enough, that's an argument.

But the way it works now, what you say doesn't stand up IMHO.

Garry_Anderson

EdInvestor wrote:

Hi Garry

Our current system doesn't regulate the products that can be designed and sold. It regulates the sales process itself.

There's nothing to stop a company designing products aimed at different risk levels -from highly speculative to very safe, this is quite normal.

What they (or the product distributors, aka IFAs) musn't do is get the match between the customer's level of risk and the product's level of risk wrong.

If you think the system is wrong and needs restructuring, fair enough, that's an argument.

But the way it works now, what you say doesn't stand up IMHO.

Hello Ed

With respect (and meaning it) - I think you are missing the point.

A product still has to be fit for purpose e.g. a parachute has to open in time.

A product cannot be sold irresponsibly - that is part of consumer law.

Knowing that the customers required this money to REPAY large amount they OWED and would need to be paid at a certain point in time, was more than irresponsible - it was criminal irresponsibility at least.

How much will people end up paying them for a £100,000 loan in total with interest, charges and everything (say £200,000+?) - without any garantee they will end up getting even half what they owe.

Maybe half towards money that they have to REPAY these people - even though they have paid out £200,000+

People buy endowment to repay house loan - not play markets - it is all BS and fraud.

If this wasn't big finance companies - just a few con artists - they would have been packed up to jail years ago.

dunstonh

Is this because you advised people to take out endowments or because you want people to have confidence in the markets like the FSA

I have sold no endowments as an IFA. As I have mentioned in other threads a number of times before, I do not transact mortgage business. 95% of my business is investment portfolios.

I have a few around 5 ISA linked mortgage going which are all well above track but the clients have suitable funds to cover any volatility that may occur. Plus the target growth rates are 5% p.a. which is an acceptable and sensible rate to use.

Before I was an IFA, I did sell endowments as a tied adviser but not one has gone to complaint. Each signed the cost comparison and stated their reasons, in their own handwriting, why they chose endowment. Each confirmed that they knew there was a risk and accepted that. These were set up on a 4.4% target growth rate, all on unit linked basis and not lumped into a bog standard managed fund. I would be surprised if any of them are not in a surplus position at this time.

Now I can say that as an IFA my knowledge (and experience obviously) is far higher than it was back in my tied agent days. I think its fair to say that even a low knowledge IFA would be of a higher standard than most tied agents.

Tied agents get fed information from their employer. The employer is going to give stats and info that helps the salesforce sell more. This can give the tied adviser a belief that they are best and brilliant at everything they do. This makes the tied advisers naive but not con artists.

To repeat an earlier comment. 26 companies represent over 59% of the complaints. 85% of the currently authorised FSA companies have no complaints at all. That suggests that we are looking at a problem that was rife in some specific companies perhaps but not widespread over the industry.

Endowments were a product designed for a different economic cycle and over used with people who should never have had them. However hindsight is a wonderful thing and you have to remember that the same Consumers Assn that encourages you to complain about endowments was recommending endowments in the past. As were the media in general.

Garry_Anderson

GA> Is this because you advised people to take out endowments or because you want people to have confidence in the markets like the FSA

Dunston> 95% of my business is investment portfolios.

So that's a YES then - what a big suprise

D> To repeat an earlier comment. 26 companies represent over 59% of the complaints. 85% of the currently authorised FSA companies have no complaints at all. That suggests that we are looking at a problem that was rife in some specific companies perhaps but not widespread over the industry.

Perhaps 85% don't offer endowment product.

And guess what - I have not complained to the FOS either.

You know why - because the FOS are part of the cover-up i.e. it is not access to justice - merely mediation for criminal actions.

Also the redress is total BS - that is why you have not addressed the above.

Here it is again:

************************************************** *********************************
So then - why is interest calculated at simple rate and not compound rate - like it would have been in the real world?
************************************************** *********************************

Simple interest would give £2.94 redress for every pound churned - when we should get at least £4.31 at the smallest rate given in compound interest.

Why do the FOS screw consumers out of proper redress?

nadnad

still on this - seriously boys agree to disagree you're never going to convince each other - but each of you have made your points and now everyone else can make their own mind up. Of course don't let me stop you if you're enjoying this banter!!

dreamylittledream

Garry_Anderson wrote:

GA> Is this because you advised people to take out endowments or because you want people to have confidence in the markets like the FSA

Dunston> 95% of my business is investment portfolios.

So that's a YES then - what a big suprise

D> To repeat an earlier comment. 26 companies represent over 59% of the complaints. 85% of the currently authorised FSA companies have no complaints at all. That suggests that we are looking at a problem that was rife in some specific companies perhaps but not widespread over the industry.

Perhaps 85% don't offer endowment product.

And guess what - I have not complained to the FOS either.

You know why - because the FOS are part of the cover-up i.e. it is not access to justice - merely mediation for criminal actions.

Also the redress is total BS - that is why you have not addressed the above.

Here it is again:

************************************************** *********************************
So then - why is interest calculated at simple rate and not compound rate - like it would have been in the real world?
************************************************** *********************************

Simple interest would give £2.94 redress for every pound churned - when we should get at least £4.31 at the smallest rate given in compound interest.

Why do the FOS screw consumers out of proper redress?

I got bored of answering your earlier points as I think I'm wasting both our time - you don't listen to anyone else's argument as you are blinkered by your own agenda.

However I have to answer this one

15/8% simple is known as court rate

Why? Because that is the interest rates used in English law when redress is awarded.

So that would be the interest rate used in the 'real' world

dreamylittledream

vinno65 wrote:

Hi Dreamylittledream,
If you read his posts I think what Gary is trying to point out is that endowment gave the building societies a chance to sell interest only mortgages to the public (remember some people were told by building societies that they would only get a mortgage if they took out an edowment)

Now we all know that on an interest only mortgage the interest never changes and consequently over a 25 yearterm the loan is much more expensive than a straight repayment. This was another reason why endowments were so popular with the industry, sorry consumer!!

As to the time bar I agree that the 2004 letters may hold a littlemore sway but even I got oneof them that had a date by which I could complain but no explaination as to how the date was arrived at!! I looked back at all the corespondence I had recieved from the firm but still could not make any sense of the date!

Watch this space on claimhandlers also, they're working on it!

regards Vinno

Vinno - the point is however that most people who have had an endowment mortage haven't paid more then they would have paid on a repayment mortgage. If they had paid more then this would have been returned as part of the redress. So I'm still left wondering how it can be argued they have lost out.

The endowment plus mortgage interest was less then the equivilant repayment mortgage (with life cover) and with redress added to the surrender value the outstanding balance of their mortgage is the same as it would have been had they had a repayment mortgage from the start.

I still can't see claims handlers taking your route through the county court for the majority of their customers. Without precedent its too potentially risky for them - there is potentially an actual financial loss should you get a less sympathtic judge.

Lets not forget timebar is based on statute - an amendemnt to limitations contained in the markets act.

A case needs to go to the High Court - I suspect it will be a legal firm that tries this, not a complaints firm.

Garry_Anderson

dreamylittledream wrote:

I got bored of answering your earlier points as I think I'm wasting both our time - you don't listen to anyone else's argument as you are blinkered by your own agenda.

However I have to answer this one

15/8% simple is known as court rate

Why? Because that is the interest rates used in English law when redress is awarded.

So that would be the interest rate used in the 'real' world

Nice try - everybody can see I have been answering your arguments - the same cannot be said of you though

And they can see who is the blinkered one with an agenda Dreamer.

Like I do not know about 'court rate'.

I refer my learned friend to Arbitration Act 1996 - in which interest may be simple or compound.

And in the 'real world' you would be earning compound interest with your damages - duh!