Report Endowment Misselling Compensation SUCCESSES

DrDan

Provider: HSBC
Amount: £831

Story: Used the information on this site and the automatic letter generator (on the Which site I think?) to send a letter. Received a letter in November last year offering compensation in full and final settlement of my complaint for £831 (I've been away but still have 3 weeks left to claim).

Question:
Does this sound reasonable for a 25 year £65k endowment policy held since Dec 97 with a current surrender value of £13.8K?

Thanks for all your help!

Dan.

mayb_2

The plan is to put you back to where you would have been with a repayment mortgage at this point in time DrDan. I cannot do the maths myself and there is a link to a tool on the Which site for calculating redress, but I understand you have to pay £50 now for access to it. It is the same calculator as used by the ombudsman apparently. Does this amount assume you are cashing in your endowment too, or just the difference between repayment and endowment on your mortgage. If you cash in your policy you should pay that off of your mortgage and set up a repayment mortgage. Not the best time to get a new mortgage so you may feel you would rather let it run for a while. Hopefully someone will tell you if that amount is realistic. You don't have to get rid of the endowment because you have received redress, but you will no longer be using it to pay off your mortgage in full.

DrDan

Thanks for your reply mayb. The amount is the difference between repayment and endowment. The policy has a current surrender value of £13.8k.

I realise (from reading this board) that the amount depends on current market conditions. How are endowments performing at the moment?

mayb_2

I am afraid I can't help you there but there will be others who can. The stock market generally is not a guide in reality to the performance of the different funds held by individual companies. I assume the company holding your endowment policy gives you predictions based on certain levels of return as trhey are required to do under FSA regs. They should also tell you what the prevailing level is for your policy fund at the moment and that can be used to give you a rough idea. Looks like if you cashed in now you could get between £13000 - £15000 tops to pay off your mortgage - including the redress.

dunstonh

DrDan, how much is the difference between the surrender value and the current value?

The redress uses the surrender value in the calculation. If the difference is more than £821 then it suggests that currently you are better off with an endowment than repayment. Not uncommon with small amounts like you have been offered.

How are endowments performing at the moment?

There are about 28,000 life funds available out there. Ranging from cash, fixed interest, uk equity, property, china, emerging markets, US and so on and on.

The endowment is just a tax wrapper. A container for the investment funds. The endowment doesnt make or lose money and has no performance. Its the investments use use within the endowment that does.

DrDan

Thanks for taking the time to reply! It's all a bit of a mine-field! I'm not sure I know what the current value is - only the surrender value.

Anyway, basically what you are saying is accept the £831 offer and keep the endowment policy (for now anyway)?

1Sam17

Dear all

My issue is with time bars, especially for those customers that have a reasonable case at to why they did not meet the deadline, where the companies concerned refuse to consider the complaint. There seems to be a stark contrast in the degree of fairness that different companies offer to their customers in relation to time-bars.

Mid 2004 the Financial Services Authority (FSA) introduced a safeguard, in simple terms requiring the firms to give their customers 6 months notice of any future intention to time bar them. If they don't tell them, they can't time-bar them. Seems fair, everyone knows where they stand- If there was not a very good reason to introduce this rule why do it.

However for everyone that had already been time-barred before then without warning, it was just bad luck, in some cases they had been unaware of their rights. Seems harsh but OK I could accept that, well I could if everyone had played by the rules.

In January 2000, the FSA introduced a Factsheet called, 'Your Endowment Mortgage- What you need to know'. This was as a result of studies (publicised in official documents) showing that many consumers were unaware of their rights and needed to be informed (as the name suggests). This Factsheet gave concise information concerning the complaint process and in particular for what reasons the customer may have a complaint.

I have it in writing from the FSA, that through the Association of British Insurers (ABI), the industry 'committed itself' to sending the January 2000 Factsheet, together with an accompanying letter, to its customers. The firms themselves were considered to be the most appropriate people to do it for various reasons.

The chairman of the FSA at the time, Sir Howard Davies, commented in his statement at the front of the FSA Annual Report 1999-2000, that he had acted to ensure that all policyholders had received this Factsheet -good for him. He went on record publicly to voice his concerns over fairness to customers.

The ABI refer to the January 2000 Factsheet and letter as the 'warm up' letter as it preceded the official 'Red Warning' letters (no one should confuse the two, they are a totally separate issue). The ABI also state that the companies had to send it.

To me this means that the companies had 'promised' to send the January 2000 Factsheet and accompanying letter. Six million of these Factsheets were ordered and the FSA and Ombudsman and everyone else are generally under the impression that they were sent.

Therefore it seems to me that any decision to time-bar anyone for whatever reason (post January 2000) is based on the fact that all of you dopey fools who left it too late were sent this information in 2000 and you knew a long time before 2004 what your rights were, as the Authority that helps ensure fairness had gone to great lengths to make sure of that.

Well that is the case isn't it? I'm sure everyone must have been sent the January 2000 Factsheet?

I'm trying to raise support to get this looked at properly.

Regards
1Sam17

turbobob

1Sam17 wrote: »

Well that is the case isn't it? I'm sure everyone must have been sent the January 2000 Factsheet?

I'm trying to raise support to get this looked at properly.

Regards
1Sam17

For what purpose? I.e. what are you hoping to get out of it? I'm sure there will be people who didn't receive one or don't remember receiving one. They could have gone to an incorrect address for example. I know the firm I work for sent them out in January 2000 though.

mayb_2

Good for your firm turbobob. It is possible however that many others didn't and I assume that if that is the case and the FSA etc have introduced the time bar, safe in the knowledge that everyone is aware of the facts then 1Sam17 has a point. I think the time bar was introduced purely to save the financial industry from the costs of its own mistakes and is totally out of order. If an endowment mortgage was missold that has to be considered as a missale at any point in time that the person sold it claims for their losses. If a person with an endowment realises that they were missold the endowment, ie they were unaware of the risks to their mortgage repayment, they may still not know how best to deal with that and if they have no warnings, or do not undertand the issues surrounding this they may fail to claim. This means at some point those unable to claim will not be able to pay off their mrotgage along with many others who could not afford to change their mortgage - particularly right now. What is going to happen then, will the mortgage providers happily reposes the houses to get their money back? Why would that be right? Or perhaps these people will be encouraged to continue their repayment into retirement, or use their retirement lump sums if they have one, to pay this off. What exactly are we saying is ok here when we accept a time barr ruling? There is only one sector who can benefit from this and that is the finance companies who missold this in the first place. Why should they be allowed to benefit. Sir Howeard Davies was very fair in his analysis of the effects and depth of the misselling that had taken place. I don't know who was in charge when the timebar was introduced, but I find it hard to believe it was him.

turbobob

Time bars are based on the Limitation Act 1980 and for an endowment complaint to be time barred the advice had to have been given more than 6 years ago, and the customer has to have had 3 years from when they became aware of the problem. This is normally when a "high risk of shortfall" letter is sent. The FSA added some further requirements in 2004 as 1Sam17 has said.