NU endowment - direct sell. Claim for compensation?

fbrj

I've been reading many threads here about claims being made on mis-sold endowments and co-incides with yet another warning letter received from NU - a "Red Alert" this time. Although I have looked at many stories on these boards, none seem to tie-in with my circumstances - I would be grateful for any views regarding making a claim.

In early 1989, I was already a NU endowment policy holder and had 2 existing policies with them. However my comments here relate specifically to a 3rd policy taken out in Feb 1989. In early 1989 I received a "flyer" - ie a mailshot - directly from NU inviting me to take out another endowment policy. It was specifically made out to me...showing potential returns at my normal retirement date. Various monthly contributions were shown...probably £25/£50/£100 per month....together with associated returns.

In my case I went for the £100/month - with profits benefit of £23034, projected amount £58462. Currently I have accrued bonuses of £11653 (Dec 2005). My red letter alert, received last month, disclosed a shortfall...depending on assumed growth rates...of between £11000 and £15500 (rounded). Those figues "take into account a final bonus" - but not a possible £7762...the NU "Promise". In other words an overall shortfall of approx £3000-£7500. The policy was used to support,with the other policies that I had at the time, an interest only mortgage of £150000.

I no longer have any associated paperwork - I just sent off the completed application form, which contained all the details (no copy to hand..may never have made one!). I do recall that the overall "picture" was that I should expect the £58462 and probably a surplus too, to look forward to.

At no time was I contacted by anybody from NU to discuss anything...risks...my financial circumstances..possibility of shortfall...where the fund would be invested etc etc. However, although I cannot recollect now...there may have been some "small print" covering some of these aspects.

Is it worth making a direct claim to NU for mis-selling? In every other case I have seen here - it involves a financial advisor; in my case there wasn't one!

dunstonh

When you complain, you are complaining about the advice. Responding to a direct offer means you are not receiving advice but choosing to do transact yourself. Providing the mailshot was compliant with the necessary standards, then you have nothing to complain about. You chose to do it. No-one advised you to do it.

dfarry

About two years ago I decided to join the compensation bandwagon and claim from Norwich Union... I was advised by Leeds Permanent Building Society as it was then (1994 - £82 per month) - this later become Halifax...however as providers of the policy NU investigated my claim.

I did it all myself and exchanged many letters of correspondence, the outcome was that in their opinion I was advised of the risks by virtue of the fact that I was shown a projected shortfall/growth illustration (8% - 10% - 12%). The 6% projection showed a small shortfall.... my complaint was mainly that the agent pushed the idea of a nest egg and how much easier the adminitration of a endowment mortgage was (portability, life insurance included etc....)

In the end frustrated by the whole thing I gave up, especially as my mortgage was changed to a repayment back in 2000. I only had paperwork from the time but nothing that proved what I had been told by the agent. I also highlighted points in their literature that I felt were ambiguous but they dismissed everything I said.

The endowment is still running and i need to get the latest projection as I may sell or cash it in - especially as we plan to buy a new house soon.

Also on the NU promise I was under the impression that this was only payable if growth averaged 6% over the term otherwise they would withdraw it (and reserve the right to withdraw it at any time anyway)

dunstonh

Alkin, please do not spam that link to every endowment post. Especially when there is no relevance to the discussion.

fbrj

dunstonh wrote:

When you complain, you are complaining about the advice. Responding to a direct offer means you are not receiving advice but choosing to do transact yourself. Providing the mailshot was compliant with the necessary standards, then you have nothing to complain about. You chose to do it. No-one advised you to do it.

Thanks for the response. I agree that I "chose to do it" but surely anyone taking out an endowment policy through a financial advisor "chose to do it" as well? To my mind, the principal difference being that my choice was based on information supplied directly by NU, whereas in the other example the choice was made based on information supplied by a financial advisor.

You also said that I would have nothing to complain about if the mailshot was compliant with the necessary standards - but isn't that also really the case if the information had been provided by a financial advisor, who also "complied with the necessary standards"?

I suppose what I am seeking views on is whether (for reasons I don't really understand at the moment) the experience of others is that claims can only be made if a financial advisor was involved. I would have thought that in my case the role of the financial advisor was effectively taken on by NU - they specifically drew my attention to the product (personally addressed to me with figures drawn up relating to my circumstances) and provided the information upon which my decision was made.....not very different to the role of a financial advisor, surely? Is there that much difference between "information" supplied (by NU) and "advice" given (by an advisor) - after all, isn't advice the supply of information? The debate then is whether the information supplied by NU, or the advisor, constituted mis-selling.

fbrj

dfarry wrote:

.....Also on the NU promise I was under the impression that this was only payable if growth averaged 6% over the term otherwise they would withdraw it (and reserve the right to withdraw it at any time anyway)

I think you are correct - thanks for reminding me. In other words we should certainly not take it for granted but probably assume it won't happen!

EdInvestor

fbrj wrote:

To my mind, the principal difference being that my choice was based on information supplied directly by NU, whereas in the other example the choice was made based on information supplied by a financial advisor.

Supply of information is not the same as giving advice and selling a product. This is pretty obvious I'd have thought - information can be obtained in numerous places, including in newspapers, on TV (eg see the Vordeman campaign) and on this and many other websites, none of which are subject to misselling claims.

Selling (and misselling) involves taking a large amount of information about the buyer, evaluating his attitude to risk, his financial position, his other investments etc. and then giving advice as to the suitablity of the product for him.If the salesman/advisor does not follow the rules correctly when the sales/advice process is going through then a missale occurs and you can claim.

But in a direct ( aka "execution-only") transaction, no advice is given and thus no misselling can have occurred.

You also said that I would have nothing to complain about if the mailshot was compliant with the necessary standards

The standards mentioned relate to whether an execution-only sale such as a mailshot errs into the area of giving the kind of "one-to-one" advice, which is regulated.So the mailshot would need to have been personalised to you in particular to be non-compliant.

....claims can only be made if a financial advisor was involved.

At that time there were two kinds of sales agents - independent financial advisors and 'tied agents' who worked full time (either actually or technically) for the product provider. Claims can be made against either type.But both involve one-on-one advice (not just information) being given as part of the sales process.

I would have thought that in my case the role of the financial advisor was effectively taken on by NU - they specifically drew my attention to the product (personally addressed to me with figures drawn up relating to my circumstances) and provided the information upon which my decision was made.....not very different to the role of a financial advisor..

If you can show the information provided was actually personalised to your circumstances ( and no-one else's) you might have a case worth pursuing. NU will probably argue however that their mailshot was compliant at the time.It's only recently that the FSA has started to look into mailshots and misselling - following the precicipe bonds cases IIRC.

Tell us a bit more about what the mailshot said.

For instance

It was specifically made out to me...showing potential returns at my normal retirement date.

You might be able to argue this was personalised.

Various monthly contributions were shown...probably £25/£50/£100 per month....together with associated returns.

But this suggests they had no idea whether you had any interest in the product or how much money you had available to invest.

dfarry

The problem I felt I had was proving anything.... basically it was my word against theirs that the agent misled me....

I'll dig out the paper work tonight and maybe scan it.... you can read the reasons they gave to me and it may help you.

EdInvestor

Hi Dan

dfarry wrote:

About two years ago I decided to join the compensation bandwagon and claim from Norwich Union... I was advised by Leeds Permanent Building Society as it was then (1994 - £82 per month) - this later become Halifax...however as providers of the policy NU investigated my claim.

Just to clarify that NU investigated your claim not because they provided the policy, but because officially they actually sold you the policy. This would have been because the Leeds agent was working under contract to NU at the time. This was the case with almost all BS endowment sales after regulation in 1988 - the BS employees were working as agents of the insurers.

The problem I felt I had was proving anything.... basically it was my word against theirs that the agent misled me....

You don't have to prove anything - they have to show they didn't missell.If you had gone to the Ombudsman you may well have won your case.

In the end frustrated by the whole thing I gave up, especially as my mortgage was changed to a repayment back in 2000.

BUT, and this should make you feel better, it's very unlikely that you would have been due any redress money, even if you had been missold and successful with the complaint.Most people only started to make losses on their endowments after the market crashed in 2001, and yours ended earlier.

dfarry

EdInvestor wrote:

BUT, and this should make you feel better, it's very unlikely that you would have been due any redress money, even if you had been missold and successful with the complaint.Most people only started to make losses on their endowments after the market crashed in 2001, and yours ended earlier.

Thanks for your feedback... luckily I was able at the time to start a new repayment mortgage and keep the term of the original mortgage - but this increased our outgoings by around £100...

I decided to keep the endowment running as the £82 wasn't really causing us a problem each month... things are changing though now that we plan to move again and take on a much larger mortgage. First stop I guess is get the surrender value of the NU endowment and decide what to do with it from there

EdInvestor

First stop I guess is get the surrender value of the NU endowment and decide what to do with it from there

If you want a view, post some info ( guaranteed sum assured, declared bonuses,S/V, monthly premium, maturity date, projections) but suggest you start a separate thread.