Report Endowment Misselling Compensation SUCCESSES

mayb_2

Smigger 15 unfortunately It is easy for the FSA to make sympathetic noises as they are not going to be the ones to tell you any nasty news. In fact they don't have to tell you anything at all - have they for instance given you any concrete support in writing? Lets hope your wait is not wasted time and you get your redress.

plzhelpmesave!

Hi there - advice please anyone!

i was helping my aunt& uncle switch energy suppliers the other day and ended up talking about mortgages. They have a £33k endowment with Standard life which is expected to achieve at worst £16K and at best £22k on maturity. Policy matures in 2016 and was taken out in 1992, with a monthly payment of £45.

I did call them on their behalf, and was told they would get £10.5K if we cashed it in now, and also found out they had 400 shares (worth £3.30ish each so £1300). My uncle said he was told this was the best mortgage for him when he took it out in 1992, and he had only recently heard that endowment were not good - bless him! In his paperwork, there is a letter from last year from Standard Life saying his investment is at high risk of having a shortfall.

Given the plan was taken out in 1992, can he make a claim (with mine and MSE help!) for compensation. Their english skills are poor (both verbal and written) so to be honest they went with the advice they were given at the time.

If we could claim, how difficult is it without much paperwork, as I don't think they have much in the way of paperwork, other than plan summaries and annual statments. Any replies/advice much appreciated. Thansk

dunstonh

Standard life which is expected to achieve at worst £16K and at best £22k on maturity

Where did you get that information from? Standard Life have not issued any guarnateed figures or bands of likely figures. They just issue the FSA standard projections without including terminal bonus on top or any mortgage promise value. SL are notorious for understating the real position of the endowment.

If we could claim, how difficult is it without much paperwork

It's not difficult. Of course, if you make things up in the complaint or make guesses and the other side has proof that information is wrong, then it can work against you. In these cases, it's often best to keep it short and sweet and dont write a letter that digs a hole for yourself (a couple of posters here will possibly own up to that happening to them).

plzhelpmesave!

thanks Dunstonh. Got the figures from th SL plan summary which shows those amounts as being what the plan would achieve on maturity at low rate (16k), middle rate (19K) and higih rate £22k), so basically in their own words.... but from what you are saying, is it likely to be worse then???

Think i will give claiming a go for uncles sake. So i should just stick to the very basics. Is it ok to say we have only recently found out it was underperforming as per their last statement hence the claim?

Thanks for any advice

dunstonh

Got the figures from th SL plan summary which shows those amounts as being what the plan would achieve on maturity at low rate (16k), middle rate (19K) and higih rate £22k), so basically in their own words.... but from what you are saying, is it likely to be worse then???

They are projection examples. In those figures you will find that standard life do not include any terminal bonus that currently exists (or in future) or the potential mortgage promise value. Both of those figures need to be added on top.

With older SL plans, the lower projection rate has, on a number of occassions, been lower than the current position. It doesnt happen as much nowadays as SL usually increase the lower value now to match the current position in these cases after they came under fire for misleading projections.

Is it ok to say we have only recently found out it was underperforming as per their last statement hence the claim?

Dont mention underperforming. Investment returns are not something you can complain about (well you can but it will be rejected). The best route is risk. He wasnt aware of the risk that it may not pay off the mortgage.

artyman

:beer: :j :T :beer: :j :T :rotfl: :beer: :j :A

Took out a Halifax low cost endownment in 1985 for £30,000

Initial premium £30 per month increased to £60 at year 10.

Received final red letter after considering using an agent but decided to use this site's advice and go it alone. I had documents going back to 1985 to prove my case despite the endownment being taken out many years before the endownment missellling legislation came in.

After a couple of months received a cheque for £1600 which fits into my pocket better than it does in that of the Halifax!!

Point to note - Halifax documents are routinely destroyed after 6 years so if you have any documents you may be one step ahead of them being able to fight you!!

Results to date - £1600 from Halifax and £800 from Council tax refund. Have also saved on car insurance, breakdown insurance, house and contents insurance. Haven't paid credit card interest for years!!:j :j :j :j :j :j :j :j

Great site. I proudly display my car sticker - "Screw the banks before they screw you"

mayb_2

dunstonh I have often read posts where you tell people that the projections that they have been given may not reflect the true position of the product they have purchased. I don't really understand that, as if the company is saying that there is a real danger that the policy will not perform - the policyholder must surely be encouraged to take action based on that advice. Whatever you may know about the company's current performance you cannot surmise that it will continue or will come up with the goods at the end of the policy. How will most people be able to make these finite judgements - if they ignore the warning letters they may be time barred if the policy fails at a later date - if they act on them they may lose out if the policy goes on to perform well. Y

You have said that those who do not act on their warning letters are obviously waiting to see if the policy performs and are therefore aware of the risk and should not be able to claim misselling at a later time if it starts to fail. You have spoken of the compensation culture in this respect.

I also remember getting the three projection figures and also a calculation of what the company expected actual performance to be over the next few years. Had it reached this target the policy would have paid off the mortgage. However, this proved to be a total overestimate on the behalf of the company and the return was in fact even worse than the lowest projection. It is not possible to assure anyone that the policy will reach its target and it is misleading surely to cast doubt on the warnings that have been issued.

Do companies give out information to customers on the terminal bonus they may expect to receive? I thought that the major problem with these policies was that this was not a figure available at any point until the completion of the policy was reached. These are neither guaranteed nor of a set sum. There is therefore, an inherent danger that they may not exist in the sum expected, projected, or indeed at all.

Buyer beware!

dunstonh

dunstonh I have often read posts where you tell people that the projections that they have been given may not reflect the true position of the product they have purchased. I don't really understand that, as if the company is saying that there is a real danger that the policy will not perform - the policyholder must surely be encouraged to take action based on that advice. Whatever you may know about the company's current performance you cannot surmise that it will continue or will come up with the goods at the end of the policy. How will most people be able to make these finite judgements - if they ignore the warning letters they may be time barred if the policy fails at a later date - if they act on them they may lose out if the policy goes on to perform well. Y

Conventional With profits endowments often do not include any terminal bonus that is currently sitting on the plan. So, you may have a plan with a current position of say £20,000 but is basing it's projection on a lower starting point of £15,000 (the current position minus terminal bonus).

Older conventional with profits plans (such as old Standard Life plans) didnt have the facility to project from a current value so they projected from the surrender value instead. A few years ago that meant that the lower 4% projection could come out with a value lower than the minimum maturity value. That happens less now as surrender values do include terminal bonus so as they have returned, the lower projection has increased. However, if there is a surrender penalty, that is lowering the projection values as well. A £2000 surrender penalty could reduce a projection by £2500.

Do companies give out information to customers on the terminal bonus they may expect to receive?

No. It is not within their remit to do so. That comes under advice rules. It would be for an adviser to consider the potential values.

I thought that the major problem with these policies was that this was not a figure available at any point until the completion of the policy was reached. These are neither guaranteed nor of a set sum. There is therefore, an inherent danger that they may not exist in the sum expected, projected, or indeed at all.

Unit linked endowments fluctuate daily. A FTSE tracker fund could lose 40% in a year (and did in the last crash). So, not including a value that can go down as well as up isnt a valid argument.

The reality is that the systems for these older plans are around 20-30 years old. They cannot be modified easily and when they were told to start issuing projections, they had to muddle their way into getting them to do it. Some of them did it the best they could with the systems they had as it would have been cost prohibitive to change it.

The flaws are not a problem as they generally understate the value. If the data is not going to be fully accurate then that is the right side to be.

However, projections are not reliable. Pearl give 6% for their projections on pensions. Yet they havent paid a bonus in 6 years. That 6% is meaningless unless you know how the fund is performing and likely to perform. Just as many unit linked endowments have seen double digit returns for the last 4 years but the projection may be 6%.

Before any decision is made, you need to understand how the projection is used and what is and isnt included. A Norwich Union endowment may have a £5000 shortfall projection at mid rate but if it doesnt include terminal bonus and mortgage promise value then there may not even be a shortfall because both of those could make up the difference. If you dont know those two things exist, then you could be kissing goodbye to £5000 by surrendering/selling (selling would mean the person buying gets it). In the case of NU and Pru, you also have special bonuses coming by the looks of things which could be worth another £300-£1000.

mayb_2

Thanks for the explanation dunstonh - I followed it as best I could but it does emphasise the fact that, although it may be perfectly clear to you, it is unlikely that the average owner of one of these investments is likely to be able to make a decision on its likely value at the end of its life. This is why I made reference to the time bar and its inherent unfairness.

"if they ignore the warning letters they may be time barred if the policy fails at a later date - if they act on them they may lose out if the policy goes on to perform well."

Heads you lose and tails they win.

Hezzawithkids

Hi all - I am feeling particularly pleased with myself today! It has taken a while but my husband & I have just banked the final payment in an endowment compensation saga that has netted us just over £36k!!

In 1997 we moved house & took out a £133k mortgage - a scary amount for us at the time but the only way we could afford it was via an endowment. We already had an £89k policy with Clerical Medical so we 'topped up' with a £44k policy from Legal & General. 9 years down the line and we were receiving the regular "warning" letters from both providers. As others have said, the projections they provided were formula and therefore meaningless, and tried for ages to get each provider to tell me exactly how OUR specific plans were performing but I may as well have been talking to a brick wall.

To cut a long story short, using the letter templates provided on this site we received £7.9k mis-selling compensation from the Nationwide (who sold us the Clerical Medical policy) and £2.3k in compensation from Legal & General - who incidentally we had to go to the FSA about as they hadn't followed the "rules" but they eventually complied. On top of that, we decided to surrender both policies and will now be paying a massive lump sum off our mortgage and coverting to a repayment with a DTA life policy costing about £25 per month. In all we will be no worse off monthly payment-wise than we were before.

As if that wasn't enough, about 6 years ago we switched our mortgage to an offset and have already reduced the capital by over £10k.

"Smug" doesn't even begin to describe it!!!!! I urge anyone with any lingering doubts to get on and write to their providers; I have already recommended this process to a couple of colleagues who will be forever grateful to me as they have had their own successes.