Endowment - Can we claim?

Ladyduran

Hi every1, we have an endowment with Norwich Union which at the moment is not on target to pay out 30k.

We would like to put a claim in and Norwich Union have told us we need to take the issue up with the advisers who sold us the policy. We took this policy out in 1993 when we bought our first house. This house was a new build and everything was really sorted for us. My memory is very sketchy as to the details of how the policy was sold. I know we went to a meeting where there were a few mortgage advisors and financial advisors and we basically had to choose the ones we wanted to go with.

Is it worth putting a claim in when our memory is so thin about how the policy was sold? A solicitor is prepared to act for us on a no win no fee basis.

Any advice appreciated.

Thanks

Tiggs_2

so you wish to claim that you were miss sold something yet you dont remember if you were miss sold it or not?

EdInvestor

https://www.endowmentaction.co.uk

Try this site for an explanation of how to complain.

Ladyduran

Tiggs wrote:

so you wish to claim that you were miss sold something yet you dont remember if you were miss sold it or not?

Basically yes my memory is very sketchy but i also dont remember being warned that there may not be enough money to pay off the amount intended.

Thanks for the link Ed.

Regards
Ladyduran

vinno65

Ladyduran wrote:

Basically yes my memory is very sketchy but i also dont remember being warned that there may not be enough money to pay off the amount intended.

Because if they had warned you of such a possiblity would you have taken a punt with your house? Of course not! How many endowments do you think they would have sold?

regards Vinno

dunstonh

Because if they had warned you of such a possiblity would you have taken a punt with your house? Of course not! How many endowments do you think they would have sold?

Probably around half the endowments that were but thats still a large number. Whilst you would argue that there was financial services greed for doing them, there was also consumer greed for doing them as well despite knowing there was risk (where risk was disclosed).

vinno65

Garbage Dunston and you know it, let's remember how most endowents were sold, it wasn't by IFA's but by banks and buildings societies using dodgy sales scripts with targets to reach,
regards Vinno

dunstonh

vinno65 wrote:

Garbage Dunston and you know it, let's remember how most endowents were sold, it wasn't by IFA's but by banks and buildings societies using dodgy sales scripts with targets to reach,
regards Vinno

Nope. I know how i sold endowments and my ratio was about 40% endowment, 60% repayment. I know the risks were discussed and all mine signed to say that they knew that there was investment risk and that 4.4% p.a. average had to be achieved over the term to ensure mortgage repayment. Luckily for me, 4.4% is a low target growth rate and all mine were unit linked so they would be in surplus positions. Possibly why no complaints have occured. However, it doesn't take away from the fact that people used to come in and ask for endowments and parents told their children to go endowment because theirs paid out a big surplus. The most common reason for me though was that repayment mortgages were usually around £10pm - £15pm more than endowment mortgages and more often than not, people went for the cheapest repayment method regardless of the risk. For me, the ratio of endowment vs repayment tended to follow whichever was the cheapest repayment method.

How many endowments did you sell and how many people did you see to base your opinion on?

vinno65

Hi Dunston,
Skirting around the issues again. You may well have been compliant in your sales but you sold a miniscule amount of the 6 million or so endowments that were sold. Again you sold on low growth rate requirements which is why you're not recieving complaints, this is great yet we have IFA's now telling us that Some policies had built in shortfalls, confusion caused by Lautro rates. At their peak endowments made up 90% of all mortgages sold and you have said in previous posts that if an IFA had a 9:1 ratio endowment to repayment you would have concerns over possible miss-sales, explain.
As for parents recommending endowments, you know they were probably miss-sold but due to tax breaks etc of the very early endowments and the high interest/inflation period they were in they were lucky enough to have a surplus, just because an endowment reached target does not make the sale compliant! How many of these people had seen the mail shots and press extolloing the value of endowments as well. You go on about Which recommending them but they obviously were not aware of the dangers either, after all if IFA's are now saying they were duped by inorrectly set lautro rates and hidden charges that they didn't understand, what chance did the rest of us have?
And are you seriously expecting us to believe that having been made aware of all the risks, people punted on an endowment for the sake of £10-15 a month? Or was the £10-15 a month used as an extra inducement for the wonderful endowment?
regards Vinno

dunstonh

At their peak endowments made up 90% of all mortgages sold and you have said in previous posts that if an IFA had a 9:1 ratio endowment to repayment you would have concerns over possible miss-sales, explain.

You said you wondered how many would have been sold had the risks been disclosed. My answers were based on that.

You go on about Which recommending them but they obviously were not aware of the dangers either, after all if IFA's are now saying they were duped by inorrectly set lautro rates and hidden charges that they didn't understand, what chance did the rest of us have?

No-one was aware of the dangers because shortfalls hadnt happened. It was just a given that it would always come right. A totally wrong assumption but that was how it was.

And are you seriously expecting us to believe that having been made aware of all the risks, people punted on an endowment for the sake of £10-15 a month? Or was the £10-15 a month used as an extra inducement for the wonderful endowment?

You could fill up a tank of petrol for under £10 then and big mortgages were £30,000 with wages around £8,000. So paying £10-£15pm less was a big thing. As I said, in the majority of cases, the individuals went with the cheapest option whether it was endowment or repayment.

Also, a 25 year endowment investing in a decent fund spread with a low target growth rate is not as risky as you seem to make out. This is reflected in the expectation that most 25 year unit linked endowments will go on to pay a surplus.

People invest all the time and take an element of risk. Just look at all the people doing buy to let mortgages now. That is far riskier than an endowment mortgage. I have an interest only mortgage with an ISA running along side it. Its current position is around 40% up on where it needs to be. I accept the risk because its a calculated risk (plus I have other means to pay if it didnt pay off). Risk means different things to different people. We have seen people on here say that they are investing the redress that they have been paid. So, they complain about the risk, succeed and then go and invest the redress in an area that involves risk.

The true reason people complain isnt about risk. It's because the returns havent been as high as required or wanted in recent times. If all endowments were above track and people were made aware of the risk at that point, how many people do you think would switch to repayment mortgage and complain?

vinno65

dunstonh wrote:

No-one was aware of the dangers because shortfalls hadnt happened. It was just a given that it would always come right. A totally wrong assumption but that was how it was.

Are you seriously telling me that the financial whizz kids who designed endowments were not aware of the dangers? Poppycock, they were fully aware but there was no risk to them as the consumer would have to carry the can if it went tits up, in other words a licence to print money

dunstonh wrote:

Also, a 25 year endowment investing in a decent fund spread with a low target growth rate is not as risky as you seem to make out. This is reflected in the expectation that most 25 year unit linked endowments will go on to pay a surplus.

This is an irrelevence. Not all endowments are unit linked and more to the point not all endowments are in good funds, the miniscule amount you sold may well be but what about the rest? Although expected to reach target is there a possibility they might fail if economic conditions go against them? Also I would refer you to an earlier post of mine, if they are so great why aren't firms running them to maturity before decideing if redress is due?

dunstonh wrote:

People invest all the time and take an element of risk. Just look at all the people doing buy to let mortgages now. That is far riskier than an endowment mortgage. I have an interest only mortgage with an ISA running along side it. Its current position is around 40% up on where it needs to be. I accept the risk because its a calculated risk (plus I have other means to pay if it didnt pay off). Risk means different things to different people. We have seen people on here say that they are investing the redress that they have been paid. So, they complain about the risk, succeed and then go and invest the redress in an area that involves risk.

Again this all irrelevant. People buying BTL mortgages now are in the main people with a property already( possibly nearing the end of their mortgage repayments) and who have the means to take a gamble. But they are gambling on house prices improving over a longer term NOT on the stock market. If their gamble fails they will probably have the means to repay their debt without losing their home. In your case you admit youself you are taking a risk with your mortgage but you have other means of paying it off should your ISA fail, I would suggest you are not at all like a first time buyer with a young family struggling to get a mortgage who has been duped into taking an endowment. This type of person does not want to take a risk. And those who have chosen to invest their redress would I suggest have already converted their mortgage to a repayment and so are no longer gambling their house on the stock market but are prepared to gamble the small redress they have recieved as they can afford to.

dunstonh wrote:

The true reason people complain isnt about risk. It's because the returns havent been as high as required or wanted in recent times. If all endowments were above track and people were made aware of the risk at that point, how many people do you think would switch to repayment mortgage and complain?

If it were explained that although at present the endowment may be in profit,but in 10 years time at maturity there could well be a substantial shortfall I believe the majority( having not been made aware of the risks or the possibility of a shortfall at the point of sale) would complain. However as you know there would be no redress due, but then the endowment could be surrendered, a lump paid off of the capital and the remainder change to a repayment. People could then thank their lucky stars that they hadn't lost out.

regards Vinno