Decreasng Term Assurance

Edward1968

I am in a prolonged 'battle' with the FSCS over the inclusion of DTA premiums in their compensation evaluation of my 'mis-sold' mortgage endowment policies.

I have argued the case that DTA is not applicable to the calculation in my particular case as I had 'other securities' against death during the mortgage term in the form of a company pension with significant death in service benefit (more than enough to cover mortgage redemption). I have argued in my case with the FSCS that their opinion / assesment is 'speculative' that I would have had to take out DTA if I had taken on a repayment mortgage. My contrary opinion is backed up by the fact that I have mitigated several years ago (before my FSCS claim) my endowment shortfall, by converting some of my mortgage to repayment and have also taken on further advances on repayment terms, all without DTA (building society have been quite happy to lend against my 'other securities'.

The FSCS response is basically "sorry, but we have the right to evaluate as we see fit, irrespective of your arguement". I have referred to both the FSA ombudsman and the FSA direct, but their response is that they have no abitration remit in FSCS decisions.

I have moved with the FSCS to stage 1 of their complaints procedure, their written response being that their position is unchanged. It is frustrating that the FSCS complaints procedure seems to be self regulating.

Can anybody offer any advice in how I should further persue my challenge?

Much appreciated,
Steve.

dunstonh

It is generally regarded that company benefits do not need to be included in the shortfall calculation for protecting a mortgage. This is because the benefits are not guaranteed and as they are in a form of a trust, they may not go to clear the mortgage. Plus, most people, even with employer benefits, are rarely adequately insured. So, it is no surprise to see them disregard that.

I have referred to both the FSA ombudsman and the FSA direct, but their response is that they have no abitration remit in FSCS decisions.

There is no FSA ombudsman. If you mean FOS then its quite correct they reject it as they have no remit and the same goes with the FSA.

As I can see where the FSCS are coming from and why they have made their decision I cant really offer you any help.

Edward1968

I appreciate your comment and reasoning, but my reasoning is also valid, that an index linked death in service benefit, paying a lump sum greater than the mortgage redemption value, if in place at the mortgage onset, is guaranteed until such time as either the pension scheme is wound up, its rules change, or the individual leaves that scheme (at which point they would have to raise another form of assurity against death to cover their mortgage).

dunstonh

Edward1968 wrote: »

I appreciate your comment and reasoning, but my reasoning is also valid, that an index linked death in service benefit, paying a lump sum greater than the mortgage redemption value, if in place at the mortgage onset, is guaranteed until such time as either the pension scheme is wound up, its rules change, or the individual leaves that scheme (at which point they would have to raise another form of assurity against death to cover their mortgage).

Death in service is primarily there to make up for the loss of retirement benefits to the spouse had a full term of service taken place. Not to cover personal liabilities.

So, if you can show that you had more than enough life assurance by other means to cover the primary purpose of the death in service as well as your liabilities and loss of income, then you may have some scope. Or if you have no dependants then you have a valid claim.

If you didn't have enough life assurance to cover your needs, then trying to use death in service to cover the mortgage is not going to work as it is quite justifiable not to include it. It really all boils down to financial need at the time.

turbobob

I dealt with an endowment case that had gone for a final decision with the Ombudsman on exactly this issue (I worked as a case handler with an insurer). The complaint had been upheld but the client argued that their DIS cover meant that they had no need for life assurance, and so they wanted DTA to be excluded from the calculation. The Ombudsman did not find in the clients favour.

Edward1968

Dunston, thanks for the advice which is encouraging as I have used the reasoning you have suggested, stating that by other means my spouse and children had financial support in place through the following means:
1) Supportive extended family on spouses side and my side, 2) Spouse returning to work with reduced outgoings (paid off mortgage, just her and our children to provide for), if my death had been through accident as opposed to illness, significant accident insurance cover.

Bob, thanks for advice, though seems that although the argument might be valid and logical, the FSCS has a reluctance to acknowledge the argument.