Endowment claim - financial services compensation scheme

sockpuppetuk

We have a couple of endowments running which are going to fall short so I decided last week to send the letter and see if we could get some recompense.
Both replies have come back today saying that as the endowment was sold by an outside financial advisor there is nothing they can do.
It also goes on to say that the company employing the advisor is no longer trading and that we can contact the financial services compensation scheme if we so wish.
Is this worthwhile or just a waste of my time?

Thanks

dunstonh

First thing to note is that your endowment projections do not mean it will fall it short. They are examples only and many endowments still project from the surrender value and not the current value. This automatically puts them in a negative position when they are not. The projection rates used may not reflect the potential of the fund. It could be better or worse than those rates.

Indeed, there were some stats put out this week that show most 25 endowment mortgages will show an average saving of around £2900 compared to a repayment mortgage. Although shorter terms than 25 years close that gap and actually reverse that figure the shorter term you have.

Next thing is that you cannot complain about investment performance. Any complaint made about a shortfall will be knocked back.

The provider is not responsible for the sale of the product. It is the advising company. Some providers had advisers but in this case it wasnt one of theirs. With the advising company no longer trading, you are being referred to the FSCS. That means you put the complaint to them and wait a year or two for a response.

If the endowment is a good one (and many good ones show shortfalls due to the flawed nature of the projections), you could find you wait 2 years and get nothing. If its a bad one and upheld, you could get some redress.

sockpuppetuk

Thanks for that, I looked on the web site before sending in the complaint and could note quite a few of the possible reasons for doing so.
If I were to cash in the endowmwnt while waiting for a decision would the complaint go ahead or would that put an end to it?.
Im just wondering this as we should be moving to Spain in the next 6 months and cashing in the endowments would enable us to pay off a sizeable part of the mortgage and so enable us some income from the rental of the house while the rest would go on the (now) repayment mortgage.

As a side issue do you know if that income would be taxable given that it would fall under the minimum yearly tax threshold, especially as it would be in joint names.

Thanks again.

EdInvestor

sockpuppetuk wrote:

If I were to cash in the endowmwnt while waiting for a decision would the complaint go ahead or would that put an end to it?.

It shouldn't affect the complaint.

As a side issue do you know if that income would be taxable given that it would fall under the minimum yearly tax threshold, especially as it would be in joint names.

Mortgage interest ( but not capital repayment) can be claimed against rental income for tax purposes,along with insurance, agent fees, repairs maintenace/service charges, plus you also have the personal allowance(s), so it seems unlikely you will fall into the tax net.Overseas landlords can get rental income paid gross if they fill in a form obtainable from the Revenue.
You might need to switch to a BTL mortgage - or pay a fee or higher interest rate to your lender - if you rent out the property.

sockpuppetuk

Great stuff .. thanks.

Now I have just realized that one of the endowments is no longer tied to a mortgage, we kept it going after selling my wifes house. Can we still make a claim on this one?

Also, both the endowments are just over 10 years old, are there likely to be any penalties if we cashed them (I was reading another thread when I spotted this) and would there be a company that would give us more than just cashing them in with the companies involved? (Norwich union and Legal & General).
If so is there a list or website showing companies that may be interested?

Think that's about it (for now)

Cheers.

EdInvestor

sockpuppetuk wrote:

Great stuff .. thanks.

Now I have just realized that one of the endowments is no longer tied to a mortgage, we kept it going after selling my wifes house. Can we still make a claim on this one?

Yes, but bear in mind that any redress will end when the endowment is no longer attached to the mortgage.If this occurred in ariund 2000 or earlier, it's unlikely you will have made a loss.

Also, both the endowments are just over 10 years old, are there likely to be any penalties if we cashed them (I was reading another thread when I spotted this)

Over 10 years should be fine, and anyway you have to make a profit, not a loss, to get taxed.

and would there be a company that would give us more than just cashing them in with the companies involved? (Norwich union and Legal & General).

Possibly.

If so is there a list or website showing companies that may be interested?

Try https://www.tepexchange.co.uk

sockpuppetuk

Again, many thanks .. you have both been most helpful.

vinno65

If you are a higher rate tax payer then you may be liable for tax, but in cases of miss-selling then the firm that miss-sold should pay any tax bill for you
regards Vinno