Endowment Shortfall

domi_2

Hello All,
Advice needed please regarding my endowment with L@G that has less than 10 years to run and is now not linked to my mortage but i have continued with it.I put a claim in to L@G and on a few points it was agred i should not have been sold the policy .(ie risk , age, earnings)but a few calculations later and a letter arrives ssaying i am not out of pocket even though the endowmant has a shortfall of about 7000.Who can i get to act on my behalf to pursue the claim again seeing that i have already tried a claim before??
thnaks
for you help
domi

dunstonh

If the complaint is upheld and no redress is payable, then that means you have go to the end of the road. You could ask the ombudsman to verify the calculation but unless you feel the calculation for redress is wrong, then there is little reason to do it.

You complain again as your complaint was upheld. You are not worse off so end of story.

EdInvestor

domi wrote:

..... a few calculations later and a letter arrives ssaying i am not out of pocket even though the endowmant has a shortfall of about 7000.Who can i get to act on my behalf to pursue the claim again seeing that i have already tried a claim before??

You could take it to the Financial Ombudsmen so the figures can be verified and the situation can be explained to you.

https://www.financial-ombudsman.org.uk

But having a projected shortfall is not the same as having made a loss ( though I know it *feels* the same.)

What you really need to to do is go and see a mortgage broker so as to resolve the shortfall problem. First call up L&G and get a surrender value for the endowment.

Fixing the shortfall will involve reducing the amount owed by the amount of the endowment surrender value, and then remortgaging the new lower amount onto a repayment mortgage so the loan is paid off at the end of the term.You should also boost the monthly mortgage payments by the amount of the endowment premium.

If you can get a low enough interest rate it may not cost you any money to do this than you are paying out now for the comboined mortgage payment and endowment premium.

If you need to replace the life cover, do it before you surrender the endowment.

dreamylittledream

Ed's advice is largely sound, however the Ombudsman won't verify a calculation for you - you need to refer your complaint on a specific issue - ie the firm have calculated redress incorrectly or your believe that part of your complaint has been wrongly rejected.

This link explains how endowment mortgage compensation works - you should be able to match your circumstances to one of the examples and see if the calculations are correct.

http://www.financial-ombudsman.org.uk/publications/guidance/mtge_endowment_redress.htm

Another alternative would to be to have the offer and calculations chcked by a professional (an IFA or claims handling firm familiar with the systems used to perfrom these calculations). However they will more then likely charge you for this service so if the calculation is correct you could end up out of pocket.

Most no loss cases are just that - you haven't suffered a financial loss to this point in time - if you take action as Ed suggested then your mortgage should be repaid as it would have been had you taken a repayment mortgage from day one.

dunstonh

however the Ombudsman won't verify a calculation for you - you need to refer your complaint on a specific issue - ie the firm have calculated redress incorrectly or your believe that part of your complaint has been wrongly rejected.

The ombudsman checks that the correct basis has been used. For example, if the complaint goes to ombudsman about the calculation, the ombudsman will ask the company how they calculated the redress. If the company responds that they used Mortgage Fundamentals then the ombudsman will just throw it straight out without checking telling the person to accept it. Companies are currently lobbying to get those type of referrals to the FOS to be handled away from other complaints and not be treated as FOS complaints. A sort of fast-track check and not the drawn out process. Although as one complaints handler told us, the longer the FOS take to review a complaint, the less redress that has to be paid because of the recovering markets and improving fund values.

dreamylittledream

dunstonh wrote:

The ombudsman checks that the correct basis has been used. For example, if the complaint goes to ombudsman about the calculation, the ombudsman will ask the company how they calculated the redress. If the company responds that they used Mortgage Fundamentals then the ombudsman will just through it straight out without checking telling the person to accept it. Companies are currently lobbying to get those type of referrals to the FOS to be handled away from other complaints and not be treated as FOS complaints. A sort of fast-track check and not the drawn out process. Although as one complaints handler told us, the longer the FOS take to review a complaint, the less redress that has to be paid because of the recovering markets and improving fund values.

That's pretty much the case - the FOS refuse to check MF calculations - which can be problemmatic if the inputs are incorrect.

However if you state your exact reason for complaint - eg incorrect redress methodology then, the FOS will instruct a recalc if they agree - given some selling agents insist of using their own methodologies (Barclays spring to mind) this can be useful. Whilst the FOS won't check the calculation itself, they will check the methodology - if you insist - they will do everything in their power to persuade people to accept the offer on the table - even if it is flawed.

All this can hardly be described as treating customers fairly.

The point over increasing surrender values is very valid - these sort of complaints are usually resolved by the FOS within a couple of moths but even this can be enough to severely reduce redress unless the calcualtion was seriously incorrect.