Help please missold policy

myskinylegs

Hi I am not sure if I am on the right thread but I am sure someone will point me in the right direction.
I bought a low cost endowment policy in 1994. I paid £50 month for 15 years. It has just matured. The letter came with an advisory final payout so of course I signed paperwork, sent original policy away and the money was finally paid into account today.
My point is I actually paid £9000 over 15 yrs but today have just recieved £8999.74 is this right. A loss of 26pence.You have to sign because the letter says the amount shown may go up/down.
I have all the original paperwork which gives a projection of final payout of between £11000 and £16000 approx.
Can anyone advise me please.Where do I stand. Have I any rights to complain.
If I had put £50 a month into a bank account over 15yrs I would have earned a whole lot more.

dunstonh

Have I any rights to complain.

On what grounds?

The FSA dont allow complaints about investment returns. So, that option is out of the window. You, through bad luck, managed to pick one of the worst 15 year periods on record for investing. Thats bad luck but not mis-sale.

if you check the illustration you have you will probably see it says on there you can get back more or less than those projections and that you could get back less than you pay in. Those have been fairly standard warnings on investments for nearly 20 years now.

Did you buy the product direct or through a mailshot or did you buy through advice? If you buy direct or by mailshot then consumer protection is limited as you are bypassing an adviser and cant complain about being badly advised. If you bought via an adviser then you have more consumer protection but that still doesnt mean that because the investment didnt work out that you were mis-sold. Investments go up and down. Its the nature of the beast. In most 15 year periods, investments would wipe the floor with savings accounts. This was one 15 year period when it didnt.

If you did buy under advice and used a tied agent, then you probably have little hope of a success with a complaint. These plans were very common with tied agents and they had been the main way to invest for the long term on a monthly basis for decades. They were not the best option in 1994 but most tied agents or that period would not have had the best options (PEP or unit trust). If it was an IFA then an IFA would have had access to the best options and there could be legs in a complaint that there that best advice wasnt given. There were plenty of £50pm PEP and unit trusts available that time that would have been more tax efficient.

myskinylegs

Thankyou for prompt reply
Yes I did buy this policy through an Independent Advisor like yourself
It was bought when we took our mortgage with the same company.
It was prepared to mature when my husband reached 65yrs.
I have looked deeply at all paperwork from day one and yes you are correct it does specify that it can go up or down. If this is so then WHY do they give projections at 5%/10% pa..
Is this to draw you to into buying thinking you can make money when in fact you dont.
Quote 'The values set out in this notice have been calculated according to the rules prescribed LAUTRO. 'Does this mean nothing then?
So i am assuming then that I was one of the unfortunate one who just happened to be in' the wrong place at the wrong time' unlike the adviser who made a packet selling a dud policy to me.

dunstonh

Yes I did buy this policy through an Independent Advisor like yourself

You may have some scope for mis-sale then as an IFA would have had whole of market and access to PEPs and unit trusts which would have been better. The IFA has to give best advice and elimate any potential options giving reasons. If no reasons for not having a PEP or Unit trust are given then the IFA is leaving themselves open to complaint.

However, they too would have been subject to investment returns.

I have looked deeply at all paperwork from day one and yes you are correct it does specify that it can go up or down. If this is so then WHY do they give projections at 5%/10% pa..

The projection rates are set by the regulator. In most periods, the projections have been achieved or beaten. I started mine investing in 1994 and I'm averaging over 13% p.a. A modern 4, 6 & 8% is nowhere near that. However, someone that started say 2 years ago would be in a loss position. Someone who started in March this year would be around 25-30% up.

The problem is that investments zig zag and one minute you can be 20% up and a week later be 20% down and the next 10% up etc (depending on the risk you take).

Is this to draw you to into buying thinking you can make money when in fact you dont.

In most periods you would have made money and beaten a bank or building society. It shows you what you may get purely as a long term average of what is within its potential. However, the future is always unknown. You just got unlucky.

Most modern versions dont have maturity points. They are open ended. So you can take them when you want or if it goes down you can leave it a bit longer to recover. Also, modern versions allow you to switch funds into lower risk or higher risk when you like. The product you had was obsolete by around 1995/6 and really an IFA shouldnt have done it. A tied agent could get away with it until around 1998/9 but an IFA has no excuse. Although perhaps I am just being a little unfair there as I remember what it was like back in 94 and we didnt have the information back then that is available today. Plus, knowledge and skills were lower back then. If it was an old school adviser he had seen decades of these plans paying out 3 or 4 times more than you paid in then it may have been his comfort zone and had confidence in them more than unit linked. Plus, the unit trust would have been just as volatile, if not more.

Quote 'The values set out in this notice have been calculated according to the rules prescribed LAUTRO. 'Does this mean nothing then?

It means nothing in the terms of what you are going to get back.

So i am assuming then that I was one of the unfortunate one who just happened to be in' the wrong place at the wrong time' unlike the adviser who made a packet selling a dud policy to me.

he wouldnt have thought it dud at the time. These had never failed before and the stockmarket has seen drops of the size it has for generations, let alone two of them in 8 years.

Part of the problem with these old plans was that they became obsolete because of rule changes and tax changes that took place 10 or so years later. They didnt have the flexibility to change in the same way modern plans do.