Offer on mis-sold endowment

kimmi

Hi
hope someone can give me a bit of advice. I posted here a few months ago about my husband's 2 endowments with CIS, that were taken out before he was considering a mortgage. We never took out a mortgage but carried on with them as savings, however after receiving a red letter earlier this year we complained to CIS that they were mis-sold on the grounds that weren't appropriate at the time. They rejected the complaint and we took it to the Ombudsman.

We've had a response today from them, and CIS have reviewed the case and are prepared to cancel the policies, refund the premiums and interest calculated at the prescribed rates of the Financial Ombudsman service (15% gross pa, reducing from 1 April 1993 to 8% pa), tax would be deductible from the interest

The offer from them is (inclusive of interest):

#1 £6786.02 (to April 06, £4455.60 premiums paid, so £2326.42 interest)
#2 £8892.60 (to April 05, £6304.20 premiums paid, so £2588.40 interest)
In total, 15674.62 less interest at 25% (is this right?)£1228.70, so £14445.92

The surrender values are:

#1 £6351.00
#2 £8059.80

So in total we would get £14890.80 if we surrender.

The Red alert letters predicted the endowments will be worth the following on maturity in 2015:
#1 £15000 at worst £4300 shortfall (4% growth).
#2 £20000 at worst £6000 shortfall (4% growth).

What should we do, surrender, accept their offer or keep paying into them (paying premiums of £63.60 a month)?

Sorry the post is so long, but we'd really appreciate some advice?

Cheers
Kimmi

dreamylittledream

Kimmi

It really depends how happy you are with the risks that are attached to the policies.

I'm sure edinvestor or dunstoh will be able to help a little more over the potential in the CIS with profits fund.

However, the compensation you've been offered makes good the loss you have made to date (ie had you saved the money in a savings account - aside from the compound interest issue of course )

It effectively lets you get out now and continue saving the policy premiums in a less risky fasion (eg into a cash ISA perhaps)

dunstonh

I'm sure edinvestor or dunstoh will be able to help a little more over the potential in the CIS with profits fund.

Not one I would want to be in. Although I would say that of all of them apart from Pru and CGNU. 4% is a fair potential figure to use for long term.

With redress offered based on surrender value, I would get out now.

kimmi

Dreamylittledream and Dunstonh

thank you both for taking time to reply.
Will take the surrender value, I think

Cheers
Kimmi