Report Endowment Misselling Compensation SUCCESSES

geoffrey6963

Hello all

Hope someone can help please? My wife and I was sold a scottish amicable endowment by the abbey national in 1987. We were told it would easily pay off the mortgage, (dont laugh the mortgage was was only £19700) and have a large sum over and above. Some years later the letter arrived that said we would need to top up or have a shortfall so we surrendered the policy and switched the mortgage ro repayment. How do I find my old policy number to claim?

regards
geoffrey6963

dunstonh

Some years later the letter arrived that said we would need to top up or have a shortfall so we surrendered the policy and switched the mortgage ro repayment. How do I find my old policy number to claim?

Oh dear. Scot Am policies are very good and have had a 96% success rate in hitting target. The only reason they showed shortfalls was because the illustration rates given on later examples were lower than the required target growth rate. So, they were mostly running in a surplus position based on the original target growth rate with the exception of the worst years of the 1999-2002 decline.

It looks like you chucked a good one away.

You had three years from being notified that there was a high risk of shortfall so if you surrendered most than 3 years ago, its too late as you should have complained within that time.

MoKa_2

SUMMARY:
Provider: Standard Life (sold through advisor at the time working solely for SL)
Endowment amount: £49,275
Shortfall: £19,000 (roughly - can’t remember off the top of my head but it was big enough to scare the living daylights out of me!)
Compensation Offered: £18.85 (yes, that’s eighteen pounds and eighty five pence, the decimal point is NOT a mistake!!!)
********

This is a pretty long post, so I've highlighted where the questions are, as opposed to the background info. Hope this helps break it down a bit!

CURRENT POSITION:
Changed to 100% repayment when we moved house in July this year, which was actually a mistake made by our new mortgage broker but because I had received the ‘red’ warning letter about my endowment and was worried about depending on the endowment to cover the interest only section, I told him to leave it as full repayment.



I received a letter from Standard Life today with a decision on my complaint. I complained on a number of points (Other options not fully discussed, adviser didn’t explain risk it may not reach target amount, adviser said it would definitely pay off the mortgage, that I raised concern about not paying off any capital only interest, but was advised not to worry, the policy would pay it all off and I would have a lump sum left over) but they have not upheld my complaint on ANY of these points.

They HAVE upheld my complaint only on two points which they found as part of the investigation, not on any of the points that I raised in my complaint, namely “it is unclear if the plan selected is consistent with your attitude to risk, and it is unclear if the fund selected is consistent with your attitude to risk.”

QUESTIION: Does it matter that they haven’t upheld any of my points, or is an upheld complaint the same regardless of which points it is based on? Is it worth me referring it to the ombudsman for the other points or would the outcome be the same anyway?

I’m shocked at the low amount of the compensation, considering the shortfall projected in my policy.

When I completed the mortgage questionnaire as part of the complaint procedure, I put in estimates for my mortgage history as all of my paperwork is still in storage following our house move this summer, and informed them that the figures provided were estimates for this reason. QUESTION: They have said in their letter that they would review the award if I could provide them with my full mortgage history. Is it worth doing this? It would mean giving the storage a week’s notice and then spending probably an entire day digging into our storage unit to find the box with all the paperwork in it. They say they’ve used assumptions for the lender and interest rates options, MIRAS amount and first payment date. It does feel like I've got nothing to lose by doing so, but I'd just like some reassurance/hand holding!

In explaining the basis for not upholding part of my claim they say
“the fact find shows that your interest only mortgage had already been arranged before you received the advice. Our adviser therefore only provided advice for a product to be linked to the mortgage selected”

This is completely untrue. The adviser ‘sold’ me both the mortgage and the endowment to go together as a package. QUESTION: Am I able to go back to them to correct them on this point and would it make any difference to the claim/award. I can’t see where on my file they think they’re seeing this information, but I know myself that it’s not the case. Is my challenging of it based on my own recollection of it any use (ie, with no other paperwork to back it up)?

They have also said
“Since we were not present at the meeting with your adviser, we are unable to establish what discussions did take place therefore we have to base our decision on the evidence available to us. The evidence in your file indicates that you received an illustration, product literature and a policy document none of which contain a guarantee of loan repayment. The illustration shows that your plan required a 7% rate of growth to achieve is target. It also gave examples of what you might get back if the plan achieved a higher or lower growth rate than this.”

Although it is true that the illustration does have a lower rate, the adviser placed much emphasis on the higher rates and did not dwell on or stress strongly that the lower rates were likely to happen. He very much favoured the middle and higher rates and was ‘confident’ that this product I was buying was right for me.

It seems they’re saying the can’t accept my version of what happened, only what’s down on paper. They’ve said if I can show them a guarantee on SL headed paper, they would reconsider. QUESTION: Would the ombudsman have the same attitude to this, or does my word on what happened actually count for anything in an appeal?

They have basically only upheld my complaint on the two points they found in their investigation and they follow this with:
“It’s not clear from the file that taking an endowment plan was the most suitable way for your to pay off your mortgage. The rest of this report explains how I have worked out your compensation and outlines what you need to do next.”

They also say that they’ve stopped the calculation at the point where I changed to a repayment mortgage. QUESTION: Now, I know they’re following FSA guidance on this, but does it make any difference that part of my decision to leave the ‘mistake’ of the switching to repayment was that it was (is) my intention to pay any compensation and the matures endowment (which now expired 10 years before my mortgage) as a lump sum towards reducing my mortgage?



I apologise for the length of the post (I might have been as well scanning in the letter!) I’m a bit flummoxed by all this and I’m not really sure what to do next. Any help or advice anyone can give would be very much appreciated.

dunstonh

I apologise for the length of the post (I might have been as well scanning in the letter!) I’m a bit flummoxed by all this and I’m not really sure what to do next. Any help or advice anyone can give would be very much appreciated.

You are only getting that amount because you are not in the loss position you think you are.

You havent got a £19,000 shortfall. Shortfalls are only in place on maturity. In the interim, you get projections and the projections using by Standard Life are lower than what they have been growing by and what they are currently growing by.

It doesnt matter what they have upheld your complaints on or rejected it on. The end result is upheld and the calculation has taken place to see if you are worse off than had you done a repayment mortgage and it this moment in time you are £18 worse off. Indeed, as they use the surrender value of the endowment, you are actually probably better off as the surrender penalty is likely to be more than £18.

Standard Life often dont include terminal bonus in their projections and they have a history or projections showing shortfalls right up until the 3 month maturity notice only for the final value to pay a surplus. Indeed, until recently, their lowest projection figure used to give a figure that wasnt possible as it was lower than the guaranteed minimum value.

I did a review of an SL endowment a few weeks back and it had shortfall projections but it was actually performing better than the target growth rate and on track for surplus if that was maintained. The shortfall projections were doing more damage than good.

It seems they’re saying the can’t accept my version of what happened, only what’s down on paper.

Thats right. Like it or not, you are accusing the adviser of telling lies. There is also plenty of evidence of consumers telling lies on complaints as well. So, the only thing that cannot lie is the documentation.

MoKa_2

Thanks for your help dunstonh. My main question about the complaint being upheld was the biggest concern for me. I had seen your explanation about the SL projections in other posts after I posted my mammoth post, and wondered if this was the case here, and what you say makes some sense.

Since SL have given me the opportunity to give them the additional information, I think now I'll try and dig out the paperwork and submit my actual mortgage history to them just to be sure that the figures are correct. I have nothing to lose (certainly not losing sleep if they take away the £18!) so we'll see what happens.

I am still a little angry about the response though, since basically the adviser IS lying (even if I can't prove it). It hurts a little on a personal level, as I stayed with this guy through 9 years of house buying (that's three properties for me! lol) and all my pension plans, and insurances etc. I sympathised when he lost his wife to cancer, and didn't take any action for the first three years of getting 'amber' warnings from SL, as I felt there was a relationship worth maintaining with him. I only considered the complaint when I received a red warning and the shortfall was so high that I couldn't afford to put any perceived 'relationship' with this guy over my financial security.

Of course, it all went sour when I wrote to him (out of courtesy) to tell him that I was going to have to contact Standard Life about the shortfall. I sent the letter by registered mail and have proof that the letter was delivered and signed for, but his business partner (who signed for it) flat out denied to me on the phone that they received it.

It irks me a little that they still get a monthly income from this and my other policies. I thought I read somewhere on here that you can stop that from happening - is that right? Is it just a case of writing to Standard Life to tell them i want it to stop? Would the money then go towards my policy?

Thanks again for your help (and sorry for sounding like a bit of a whinger - that's so NOT me normally!)

dunstonh

It irks me a little that they still get a monthly income from this and my other policies. I thought I read somewhere on here that you can stop that from happening - is that right? Is it just a case of writing to Standard Life to tell them i want it to stop? Would the money then go towards my policy?

You can appoint another IFA and they will receive the renewal commissions. In the case of endowments. Some companies will take an instruction to remove renewals from that particular adviser, some wont. However, none of them will pay the renewals to you or add them to the plan. They will keep them for themselves.

I am still a little angry about the response though, since basically the adviser IS lying (even if I can't prove it). It hurts a little on a personal level, as I stayed with this guy through 9 years of house buying (that's three properties for me! lol) and all my pension plans, and insurances etc. I sympathised when he lost his wife to cancer, and didn't take any action for the first three years of getting 'amber' warnings from SL, as I felt there was a relationship worth maintaining with him. I only considered the complaint when I received a red warning and the shortfall was so high that I couldn't afford to put any perceived 'relationship' with this guy over my financial security.

What he could have done is review your policies and pointed out that whilst the projections are poor, they are using rates lower than is being achieved and given you are more realistic projection. Understanding or lack of leads to many complaints which really shouldnt be placed as a bit of dialogue between the adviser and client would avoid it.

Some advisers take it personally when a complaint comes in. Some justifiably and some not.

MoKa_2

And thanks again for your comments. People like you make these forums what they are (since the Great Money Saving Expert can't be everyone at once)

mayb_2

Thats right. Like it or not, you are accusing the adviser of telling lies. There is also plenty of evidence of consumers telling lies on complaints as well. So, the only thing that cannot lie is the documentation.

Our endowment policy documentation, and that of many others in a similar situation to MoKa, was full of lies dunstonh - as the documentation was written by the advisor and not shown to us at the time I think that it is a bit daft to say that the documentation cannot lie! We could prove it was lies too but it made no difference to the outcome. However, If I was you MoKa I would try the Ombudsman - you know the truth and maybe the truth will out.

Crazy_Saver

mayb wrote: »

Our endowment policy documentation, and that of many others in a similar situation to MoKa, was full of lies dunstonh - as the documentation was written by the advisor and not shown to us at the time I think that it is a bit daft to say that the documentation cannot lie! We could prove it was lies too but it made no difference to the outcome. However, If I was you MoKa I would try the Ombudsman - you know the truth and maybe the truth will out.

Hello mayb

I thought you'd deserted us!!!;)

mayb_2

Hi Crazy Saver - no chance. I have had major problems with my old computer and it has taken me months to get a new one and back on line. I was so dissapointed to find the same old, same old being chundered out regarding the lies told by claimants blah blah blah.

I wonder if anyone remembers the discussions about the sub prime market in America and the immoral practice of lending money at 5 or 7 times income and how it would cause a crash here sometime soon? Dare I say the words Northern Rock?

keep smiling.;)