Endowment - Can we claim?

dunstonh

Are you seriously telling me that the financial whizz kids who designed endowments were not aware of the dangers?

Again, you are measuring the quality and experience of people today against those in the past. There had never been a point in the history of the insurers where they had failed to to this level.

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?

They are not allowed to.

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.

So again, you measure everyone by the fact that some will be in this position.

But they are gambling on house prices improving over a longer term NOT on the stock market.

What's the difference?

If their gamble fails they will probably have the means to repay their debt without losing their home.

How will they have the means. Lets say we see a 30% drop in house prices and the subsequent drying up of people wanting to rent. Or if interest rates rise by 50% over current levels. How will many of them repay the debts? Many will lose their homes.

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.

Again, you are assuming I am making reference to everyone.

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.

This type of person may accept the risk because it is 10-20% cheaper per month than the alternative option and they dont have the budget otherwise.

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.

That money could reduce the borrowing but they are chosing to keep borrowing money and invest it. The endowment was invested so what is the difference? The difference is that the endowment didnt perform as was needed. Not the fact the person was nil risk.

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.

Not a good enough answer. I spoke with someone the other day that had investments that were above their risk profile from someone who didnt do a good enough job ascertaining and explaining risk. I asked her what she would do if the value went down by 30% and she said because it had gone up by more than that she wouldnt mind. However, I then said if you were investing 10k today and in the first year it went down 30%, what would do and she said she would be upset and would change the investment. Both scenarios saw a 30% drop but you get a different answer and a different outcome.

You love to harp on about advisers being greedy but people are as well. Why are people risking their homes to do buy to let? Why do people invest at all? It works both ways. You are also taking your own views on risk and assuming everyone is the same as you.

The facts are many endowments were mis-sold. Probably half. That means many were not. However, if the endowments were half way through and in a surplus position and that individual was made fully aware of the risks involved at that point, most wouldnt change it.