Endowment compensation settlement

mark2904

My endowment matures in October 2011. Last July I received a red letter telling me the policy was at high risk of a shortfall. The letter explained the policy would fall short from £2400 to £4800. I made a complaint for being mis-sold a poicy. My complaint was upheld and I have been offered £637.95. This figure is based upon the current value of my policy to the amount I would have repaid with a repayment mortgage. I have 28 days to accept or decline the offer. I have no idea whether this is a fair offer or just an opening bid. I would be grateful for any input as to whether I should accept the offer or not or what action I should take next.
Thanks

dunstonh

I have no idea whether this is a fair offer or just an opening bid.

The calculation is set and not an opening bid. They are required to calculate the cost difference between the endowment and repayment mortgage and put you in the position you would be if you had a repayment mortgage and were to switch to that for the remainder of the term.

In very simple terms they work out where the repayment mortgage balance would be now and then deduct the surrender value of the endowment from that and if there is a difference, that is the redress you are paid. There are a couple of other things that can be included but that is the key process.

I would be grateful for any input as to whether I should accept the offer or not or what action I should take next.

If the calculation is correct then there is nothing to argue.

The letter explained the policy would fall short from £2400 to £4800.

It does say that. It says that if it grows at x%y% or z% p.a. for the remaining term, this is what you could get. You can get back more or less than those figures.

mark2904

Thanks for the reply.
My red letter explained that if the policy grew at 4 per cent the shortfall would be £4800, at 6 per cent £3800 and at 8 per cent £2400. Do I have any grounds to try and claim more in compensation?

opinions4u

mark2904 wrote: »

Thanks for the reply.
My red letter explained that if the policy grew at 4 per cent the shortfall would be £4800, at 6 per cent £3800 and at 8 per cent £2400. Do I have any grounds to try and claim more in compensation?

I think the early reply clarified this:

dunstonh wrote: »

The calculation is set and not an opening bid. They are required to calculate the cost difference between the endowment and repayment mortgage and put you in the position you would be if you had a repayment mortgage and were to switch to that for the remainder of the term.

In very simple terms they work out where the repayment mortgage balance would be now and then deduct the surrender value of the endowment from that and if there is a difference, that is the redress you are paid. There are a couple of other things that can be included but that is the key process.

If the calculation is correct then there is nothing to argue.