Endowments - Too late, or can I claim...

Nemo

I suspect the answer is going to be too late, but here's the info.

I took out a interest-only 25-yr mortgage 11.5 yrs ago, along with an endowment with Friends Provident. This was via a tied-agent at the estate agents. The mortgage was for £35000.

After only about 4-5 yrs I got the first letter saying that I was about £8000 below what was needed to pay it off in full. The next year, it was at about £11-12000, where it's been since. At the time, I just stuck my head in the sand, hoping that things would improve as there were many years ahead until completion.

About 3 years ago, I faced up to the problem, and took out a repayment mortgage for the full £35,000 over 12 years. Sick of mortgages, I've payed most of it off, and will pay the remaining £5000 of so sometime soon. I kept the endowment going as a separate investment.

When articles about mis-selling first appeared, I thought that I probably didn't have much of a case, as I was told there was a possibility of a short-fall, althought she did heavily emphasise how over the recent years many people received a decent lump-sum at the end.

Having thought about it all now, the reasons that I think I may have been mis-sold are:-

- A short-fall, although possible, was deemed unlikely. Certainly not a 5-figure sum.
- I had no previous exposure to the stock-market. In fact I had no previous financial products eg. pensions.
- When I was asked if I wanted a repayment or interest-only mortgage, she had to explain the differences to me. One thing she said, was that if I thought that I may move house before the mortgage was paid up, then an endowment was better. I've since been told that this is nonsense.
- I hadn't, and still haven't, any dependents, so didn't really need the life-insurance (or is that assurance?) part of it.

I realise I may have left it too late, but any thoughts.

If it's possible and worth claiming, what's the best way? Would I be better using a claims company because of the time-element?

Thanks.

dunstonh

If it's possible and worth claiming, what's the best way? Would I be better using a claims company because of the time-element?

You say you were aware that a shortfall was likely. That would work against you.

- When I was asked if I wanted a repayment or interest-only mortgage, she had to explain the differences to me. One thing she said, was that if I thought that I may move house before the mortgage was paid up, then an endowment was better. I've since been told that this is nonsense.

Actually its not nonsense. Regulars movers are often better off financially on interest only basis with a repayment vehicle (assuming repayment vehicle was to hit target). However, the fact that both repayment and endowment was discussed in detail works against you.

- I hadn't, and still haven't, any dependents, so didn't really need the life-insurance (or is that assurance?) part of it.

You are talking about a period before regular contribution ISAs were common place and endowments were the most common means of saving long term. Also, you went through a tied agent. If they didnt offer a regular contribution PEP in their range, they didn't have to recommend it. A tied agent only has to offer the best option in their range. If better options exist elsewhere, that's not their problem.

I realise I may have left it too late, but any thoughts.

Morally, I dont see how you can have a complaint. You knew it wasnt guaranteed to pay off and you confirm that the various methods were discussed.

You could put a complaint in and lie and that is your choice but you would be doing it on the hope that FP dont have decent documentation to support the sale and that they havent already time barred you.

If time barred, a claims company will have no more success than you. Indeed, claims companies dont have more success than individuals anyway. They just say they do because they cherry pick the ones that are likely to succeed.

Nemo

dunstonh wrote:

You say you were aware that a shortfall was likely. That would work against you.

My post actually said '- A short-fall, although possible, was deemed unlikely. Certainly not a 5-figure sum.'

I've just looked through my folder (I keep everything), and can't find any letter that mentions time-barring, or 6-month limit or anything. All I've got are the letters informing me of a probable shortfall and the FSA leaflets saying what to do to make up a shortfall etc. So, even if I am time-barred, I've not been told about it. Don't know if I should have been.

Anyway, thanks for your reply.

defender_of_the_weak

Drop FP a line just to check, all you need to say is I complain and believe I was mis-sold this policy. FP apply the time bar ruthlessly and were one the early movers in getting letters out.

90% plus chance its too late.

No it won't make any difference to the time bar if you use a company unless you plan to go to court

Dunston, willl you please stop generalising about claim companies of which most of what you know is fed from your network and the IFA press and wildly inaccurate

vinno65

Hi Nemo,
Don't know if you still read the posts, but I agree with DOTW in that if you feel you have a grievence then you should complain. The fact that the risks were explained to you are only one part of what makes a sale compliant, Dunston knows this and probably should have explained it better to you rather than suggesting you would be a liar if you complained and morally incorrect. For a sale to be complaint the firm also has to show that the endowment was suitable for your circumstances. You mention in your post the fact that you have no dependants at the time of sale,were you also single?. If you were then the FOS would most likely uphold a complaint. However as DOTW says you may well be time barred from complaining by FP.
regards Vinno

P.S. Dunstonh can you explain why a firm would cherry pick complaints when
in other posts you say that all they do is send a letter anyway, I would have thought that on a no win no fee basis firms would accept every complaint and send letters (the cost of a stamp etc) in the hope of being successful, in that the more you send the more likely you are to get results,no?

dunstonh

The fact that the risks were explained to you are only one part of what makes a sale compliant, Dunston knows this and probably should have explained it better to you rather than suggesting you would be a liar if you complained and morally incorrect. For a sale to be complaint the firm also has to show that the endowment was suitable for your circumstances.

You mention in your post the fact that you have no dependants at the time of sale,were you also single?. If you were then the FOS would most likely uphold a complaint.

If you accepted the investment risk then then endowment was suitable for your purpose. If the mortgage was commenced later than it was, then you could argue that an ISA would have been better (and it would have been). However, this was before ISAs. At that time PEPs were available but regular contribution PEPs were not common place with tied agents and tied agent rules say they have to recommend the best product in their range. Not the best product that there may be. If there is no PEP then the endowment fits the bill. Especially if the monthly repayment was less than a repayment mortgage which around 1995 it would likely to have been.

P.S. Dunstonh can you explain why a firm would cherry pick complaints when
in other posts you say that all they do is send a letter anyway, I would have thought that on a no win no fee basis firms would accept every complaint and send letters (the cost of a stamp etc) in the hope of being successful, in that the more you send the more likely you are to get results,no?

It's well known that many firms cherry pick the cases that a likely to win. It helps push up their success rate stats and they use those stats in their advertising to promote their better success rate than doing it themselves. However, there are some that will complain regardless of whether there is a valid complaint or not. This has been highlighted in the past with certain websites where if you answer the questions in a way that is quite clearly not a mis-sale, it will still tell you that you can complain.

Many complaints firms do not personalise the complaints letter. They just list off every conceivable area that may be a mis-sale in the hope that at least one cannot be proven otherwise by the advising company. You tend to find the ones that tell everyone that they complain are the ones that send in a generic letter each time.

Dunston, willl you please stop generalising about claim companies of which most of what you know is fed from your network and the IFA press and wildly inaccurate

My views on claims companies had improved with your posts DOTW and I respect the time and effort you put on this site. I do tend to find your posts are balanced in opinion. However, just as the bad apples have tainted my industry, these bad claims companies are tainting yours.

defender_of_the_weak

Dunston

Thanks for the kind words but I am afraid you are over generalising again.

'Its well known that many firms' Who and how many out of the total number of claims companies? I would also highlight that a significant number of these companies are your IFA brethren going through old client files and calling up clients encouraging complaints against other adviser. Next time you go to a conference be careful who you sit next to.

'Many complaint firms do not personalise' Again no statistics or data to back this up.

Please remember that millions of people have suffered at the hands of financial advisers and their companies over the years and now when companies and individuals want to take them to task over their past failings (yes I get paid for it) the industry runs and squeals like stuck pigs and hide behind weak quasi legal technicalities such as time barring to avoid liability for the advise they gave.

dunstonh

'Many complaint firms do not personalise' Again no statistics or data to back this up.

I cant back it up on here but we were shown a some copies of complaints letters from a couple of companies which were identical in every case.

Please remember that millions of people have suffered at the hands of financial advisers and their companies over the years and now when companies and individuals want to take them to task over their past failings (yes I get paid for it) the industry runs and squeals like stuck pigs and hide behind weak quasi legal technicalities such as time barring to avoid liability for the advise they gave.

Hey, there were accusing me of generalisations and look at that.

Of couse, the good natured come back on that could be that whilst people have suffered, they are getting to suffer again by unregulated individuals trying to profit on their hardship.

I very much doubt the companies in question which have dubious techniques have any link to you DOTW. It doesnt match your style of posting. I do see you in a very similar position as myself trying to put on a brave face and promote good service and advice whilst others go and blow it all for you.

vinno65

dunstonh wrote:

If you accepted the investment risk then then endowment was suitable for your purpose. If the mortgage was commenced later than it was, then you could argue that an ISA would have been better (and it would have been). However, this was before ISAs. At that time PEPs were available but regular contribution PEPs were not common place with tied agents and tied agent rules say they have to recommend the best product in their range. Not the best product that there may be. If there is no PEP then the endowment fits the bill. Especially if the monthly repayment was less than a repayment mortgage which around 1995 it would likely to have been..

Whether you have accepted the risk or not still does not make a sale compliant!. It is accepted that for single people with no dependants endowments are unsuitable, and that a repayment mortgage is better for the reason that these people are more likely to be transient, more likely to up sticks and move abroad for example, if they did this 3 or 4 years into an endowment mortgage they would have wasted a lot of money on premiums and a lot of money on interest on a loan that has not goen down.

regards Vinno

dunstonh

It is accepted that for single people with no dependants endowments are unsuitable, and that a repayment mortgage is better for the reason that these people are more likely to be transient, more likely to up sticks and move abroad for example, if they did this 3 or 4 years into an endowment mortgage they would have wasted a lot of money on premiums and a lot of money on interest on a loan that has not goen down.

I have not seen any evidence to that effect. Back in the 80s and early 90s endowments were the most common form of long term regular investing. There were a limited number of alternatives and whilst what you say would be correct today, it would be incorrect back then.

vinno65

dunstonh wrote:

I have not seen any evidence to that effect. Back in the 80s and early 90s endowments were the most common form of long term regular investing. There were a limited number of alternatives and whilst what you say would be correct today, it would be incorrect back then.

What do you mean you have seen no evidence of this? Are you saying you have never seen endowments surrendered in the early years? Is it not more likely that a young single person with no dependants would give up a property to travel the world or move altogether to another country,as opposed to a married man settling down on the property ladder with a young family?
Would it be good advice to tie the young person to a long term endowment knowing that if he did give the property up and surrender the endowment he would be unlikely to get back what he paid in and that also all along he had in effect been paying rent rather than chipping away at the capital loan?
Your an IFA you work it out.
As further evidence you might like to check out the FSA literature on endowments sold to young single people and also the uphold rate on complaints made on this basis.
regards Vinno