Report Endowment Misselling Compensation SUCCESSES

holly_hobby

The FSA 87 (The Act) came into force April 1988 - this act was in tandem with polarisation, and regulated the sale of financial services.

Regulation means that the adviser must fully assess the individuals personal and financial status, and asperations, making recommendations in consideration of the same.

In recommending a product, they must take account of/or assess the individuals ATR, existing provision, budget and requirements - recommending (in the case of CRs) a product from their providers range (or refer to an IFA, if their provider did not offer a suitable medium), or from the market as a whole if the adviser was an IFA.

The entire sales process post A Day is documented (originally by longhand, which was subsequently replaced by electronic mediums).

In the case of a Tied Agent, with the sale made by an employed CR, the provider (i.e insurance company), is responsible for the advice and recommendations given by the Tied Agt/CR, in respect of regulated business - but naturally they can not compensate for loss of expectation. Indeed, their POS docs when submitted for processing, would have firstly gone through a new business/compliance assesment (either on 100% checking, or an ad hoc basis if they had good persistancy and audit checks). Such reviews carried out by a team of experienced/qualified individuals, whom assessed the submitted sales documentation, to asertain that all financial exposure had been suitably addressed, with appropriate/suitable recommendations provided. And that any product that was purchased was both fully appropriate to the client, met best advice directives and correctly documented.

In the case of an IFA, the adviser is directly responsible for the advice and recommendations - but again neither they nor the provider, can be held responsible for any loss of expectation, under the contract.

Any regulated policy is mis-sold, if the contract is unsuitable to the individuals risk profile, if associated risks are not discussed and accepted, failure to meet the clients budgetary constraints, suitable provision is already in place, or the provision is inappropriate. Again, loss of expectation is NOT a basis of mis-sale.

A "failed promise" as you put it - well if the POS docs did include a "promise" that as you say subsquently failed i.e they defaulted on it - than this would actually be a guarantee, and the complaint would be duly upheld, in the form that the target sum would indeed be guaranteed by the provider at maturity. But this simply did not occur as the policy carries no guarantees (apart from of course GSA on death and BSA at maturity).

Low cost endowments sold in support of interest only mortgages, are found as mis-sold on the above basis, or if the complaint is simply not contested due to the absence of POS documentaton, which hasn't survived the passage of time (which has been the major reason for the level of industry upholds) . In the case of an uphold, the individual is compensated in the form of the differential in cost between an equivilent capital and interest mge to the actual IO mge & accompanying LCE (over the time the policy was used as mge repayment vehicle) - with any calculated higher costs incurred under a low cost endowment refunded & the addition of statutory interest. The calculation is performed using a industry wide software programme, which is also used by FOS in their own evaluations following referral. At which time the policy was also surrendered as wholly unsuited to their requirements, or some providers were more lenient and allowed the policyholder to retain the contract, without further liability.

Policies sold in the 1970s and pre 1988 (ie pre A Day), are pre regulation, and accordingly whilst the salesperson could not make any misleading statements, neither were they required to assertain suitalibity (yes a clearly flawed basis, which the Act sought to remedy).

Generalisation and accusations of how and the basis, of why such policies were sold i.e your claims that all sales were solely based on commission and nothing to do with suitability or the clients requirements - are fundamentally and grossly flawed.

Saying that the individual could ignore all warning statements on illustrations and policy contracts - is fundmentally and grossly flawed.

Indeed, whist there are circumstances where the sale, or documentation and record keeping of the sale was below industry standards, to use a sweeping statement that ALL advisers basically knew the policies and underlying structure were flawed, and that they KNEW the policies didn't have a hope in hell of meeting the taget sum, but simply chose to lie and conceal this to the individual in their greedy source of commission - is quite frankly highly offensive to the industry, and professional who hold the provision of SUITABLE and appropriate advice in the highest regard, and is quite simply not true.

Indeed, many advisers themselves held endowment mortgages, for the very reasons they were seen as attractive by the market place as a whole - surely you conceed that a reasonable person simply would not purchase something that they knew at outset to be unfit for purpose, if your argument is to be accepted of course !

I know that those who hold policies are looking for someone, anyone, other than the markets themselves and reduction in returns, to blame for their perceived loss of forecast return - and whilst underlying fund management in some providers may have been better, it is certainly not the whole story. Indeed, the underlying factors as to why LCEs have failed to perform over recent yrs, have already been discussed at length in the other thread you have participated in, of similar title - so I feel no requirement to further debate on that aspect here, as interested parties may review that thread independently.

It does infuriate me when such sweeping statements gathered outside of core experience, are made as if to be both accurate and based on some kind of insider knowledge.

I wholly support and embrace differences of opinion, its healthy to debate and thats what a forum is all about - but please ensure that "factual" statements are just that .. based on fact, as failure to do so can be both misleading and unhelpful to the layman seeking to gather information. Otherwise such statements being made for discussion would be a more accurate description.


Hope this helps

Holly

dunstonh

In many cases in the late 70s and 80s at least, insurance company representatives were daily amd routinely receiving calls from their network of high street building society manager mates with serious leads (a sure thing actually) whereupon the insurance company printed the endowment mortgage versus repayment mortgage comparison illustrations on standard insurance company forms and then delivered them within hours to the high street building society managers to enclose as part of the proposal pack passed on to the prospective borrower. I rweckon I still have a few examples buried in my loft should I ever need to produce them!

Yes it was. However, that is all pre-regulation (see Hollys post)

2sides2everystory

dunstonh wrote: »

Yes it was. However, that is all pre-regulation (see Hollys post)

And 1988 brought many things but it didn't reprogram the sales forces and it especially didn't bring warnings to forget everything that was said previously about endowments when returning customers moved house and came back for another one.

It is incorrect to imply that we woke up one day and discovered "regulation" was in play.

My newest endowment was purchased in 1987. I had four. I got compensation for the shortfalls in 2003. I knew too much to fall for the cr&p about any pre-1988 "cut-off". I received around £10,000 compensation on the £50,000 low cost endowment that was supposed to mature in 2012.

dunstonh

And 1988 brought many things but it didn't reprogram the sales forces and it especially didn't bring warnings to forget everything that was said previously about endowments when returning customers moved house and came back for another one.

Easy to blame the reps. However, you used to get people walking through the doors asking for them. Also, many people took them out because they were typically 10% cheaper than repayment mortgages. Getting on the ladder at the lowest cost was often the driver.

Knowing what we know today makes it a lot easier to look back. However, you had Which? recommending endowments and had this site existed then, there would probably be an endowment best buy article. Hindsight is wonderful.

1988 started the process but it was a slow road.

My newest endowment was purchased in 1987. I had four. I got compensation for the shortfalls in 2003. I knew too much to fall for the cr&p about any pre-1988 "cut-off".

No you didnt. You used a rep of the insurance company and not an accountant, solicitor or what is now on IFA.

holly_hobby

f

2sides2everystory wrote: »

My newest endowment was purchased in 1987. I had four. I got compensation for the shortfalls in 2003. I knew too much to fall for the cr&p about any pre-1988 "cut-off". I received around £10,000 compensation on the £50,000 low cost endowment that was supposed to mature in 2012.

Some providers simply chose to uphold pre A day complaints as a consession with little investigation - but there was certainly no regulation forcing them to do so, unless the complainant could provide documentary evidence (or that the term clearly demonstrated undue care i.e policy term exceeding NRA,) that undue care was shown, or failure to disclose material details if the adviser gave information.

I do find it interesting that you say you have the knowledge to not put up with any "cr*p" regarding regulatory constraints, or the investment basis of the policies, but seem however to have continued to effect multiple policies of the same investment basis - unless of course that knowledge is based on hindsight, and what had been debated in the public domain at the time of your complaint.

Indeed, as prev explained, pre A day sales have no regulatory basis to be investigated on retrospective suitability (notwithstanding term or comment) - as their sale at the time was not made on this basis. Indeed, you were very fortunate to have recd compensation on this basis without referral to FOS, as I know many providers accordingly rejected such pre A day complaints. Any complaint re an investment may only be made, and assessed, on the lack of suitability to the clients risk profile at the POS (as we already know you can not be compensated for loss of expectation).

Happily for you, the provider chose to treat your policies as if they were post A day, as a result of which it would have been a straight uphold (due to lack of supporting docs due to a pre regulation sale). But it needs to be clear that you were NOT compensated because of the loss of expectation re performance to target, rather you were compensated because the provider chose to treat your sale as regulated, and were thereby unable to determine or prove, that you aware of the risks associated with the contract due to the lack of documentaton i.e we know there would not have been either a fact find or reason why/recommendation letter, and they probably had next to no actual POS docs (inc illustrations), largely due to the passage of time. (although I note, that you do prev say that you do acutally have illustrations from your previous policies stored in your attic).

With respect to the compensation received, this sum was not in respect or reflective, of any shortfall of performance to target sum, but the difference in cost over the term (& the addition of statutory interest) between the 2 methods - 2 different things. I also imagine from your posts, that you directly used the monies to reduce your mortgage and switch to C&I over the remaining term.

Hope this helps

Holly

2sides2everystory

dunstonh wrote:

Easy to blame the reps.

I wasn't really blaming the reps - saleforces couldn't be reprogrammed unless boards of directors caused it to happen and I am perfectly happy to presume that they did not - that would have slowed new business!

holly_hobby wrote: »

Some providers simply chose to uphold pre A day complaints as a consession with little investigation - but there was certainly no regulation forcing them to do so, unless the complainant could provide documentary evidence (or that the term clearly demonstrated undue care i.e policy term exceeding NRA,) that undue care was shown, or failure to disclose material details if the adviser gave information.

Maybe so but in my career in insurance I was not constantly sailing close to the wind with regulation. I was upholding a standard which has long since been ridiculed and now only exists in the much debated (for some reason - profit?) words of FSA Principle 6 - one of treating the customer fairly.

I do find it interesting that you say you have the knowledge to not put up with any "cr*p" regarding regulatory constraints, or the investment basis of the policies, but seem however to have continued to effect multiple policies of the same investment basis - unless of course that knowledge is based on hindsight, and what had been debated in the public domain at the time of your complaint.

My knowledge was based on being there, not as a life insurance salesman but rubbing shoulders daily and being encouraged to let them loose on my client base. I was "groomed" both as a customer and as someone who might entrust my own customers.

Indeed bla bla ... Indeed, you were very fortunate to have recd compensation on this basis without referral to FOS, ...

I'll tell you what was fortunate - that I had received a fantastic training in customer services and what was fair in all classes of insurance. I was even taught to represent my clients in such a way as to act as a foil to claims department to find ways to pay claims that tested the wordings. As I said earlier - something which would be ridiculed now.

Happily for you, etc. etc.

I was persuasive and they chose not to argue beyond a certain point as their arguments had been designed for laymen not highly knowledgeable and principled industry insiders (=dinosaur in 2011).

With respect to the compensation received, this sum was not in respect or reflective, of any shortfall of performance to target sum, but the difference in cost over the term (& the addition of statutory interest) between the 2 methods - 2 different things. I also imagine from your posts, that you directly used the monies to reduce your mortgage and switch to C&I over the remaining term.

Have it your way. It made up the shortfall, my mortgage by then had already been made interest only, the cash was simply paid as a cheque for me to do with as I wished and I felt mightily good about the pathfinding nature of my complaint which took many months to press home. I can even remember where I was for one particular slanging match of a telephone call with the guy that was assigned my case. A while or two after that, I learned how these people weren't long term employees of the insurance companies but a kind of transient complaints force who moved between life insurance companies just like sales forces used to.

Hope this helps

Helps who? Some poor unfortunate layperson who matches your comments with the line their insurance company has spun them?

kartingmum

We have had a Emcas ringing us up stating that they can get us compensation for our mis-sold endowment.
My husband - who was single at the time, took out a With Profits endowment, which started 26/09.88 after having had a repayment mortgage previously after being told it would pay off the mortgage with a bonus. The policy was with Eagle Star, now Zurich and sold to him by Nationwide Anglia.
He has had the red letters and Nationwide told him verbally that he wouldnt be able to claim.

Just wondered if it is worth our while sending back the forms or to ring Zurich and see what happens.

holly_hobby

2sides2everystory wrote: »

I wasn't really blaming the reps ?

You were

2sides2everystory wrote: »

Maybe so but in my career in insurance I was not constantly sailing close to the wind with regulation. I was upholding a standard which has long since been ridiculed and now only exists in the much debated (for some reason - profit?) words of FSA Principle 6 - one of treating the customer fairly.

There was no regulation prior to FSA 87, so apart from provider product tests, and a sales skills training course, that was all that was reqd to sell insurance of assurance contracts. Morals can't be bought, taught, or trained - which goes for all walks of life and professions.

I too was lucky to be employed and initially trained by highly reputable providers, which along with my own moral compass, gave me a great basis for progressing and making a career in the industry.

And I do agree heartily agree that one should never perform ones duties to the basic minimum regulatory requirements, but to do so to the individuals highest moral and professional capabilities - seeking guidance where necessary.

However, it is unfortuate fact that you will always see individuals who do the "bare minimum" - thats agreed.

2sides2everystory wrote: »

My knowledge was based on being there, not as a life insurance salesman but rubbing shoulders daily and being encouraged to let them loose on my client base. I was "groomed" both as a customer and as someone who might entrust my own customers.

So you were not trained in the products, but were some sort of admin person.

2sides2everystory wrote: »

I'll tell you what was fortunate - that I had received a fantastic training in customer services and what was fair in all classes of insurance. I was even taught to represent my clients in such a way as to act as a foil to claims department to find ways to pay claims that tested the wordings. As I said earlier - something which would be ridiculed now.

I thought you weren't a salesperson ? Foiling claims depts ?

2sides2everystory wrote: »

I was persuasive and they chose not to argue beyond a certain point as their arguments had been designed for laymen not highly knowledgeable and principled industry insiders (=dinosaur in 2011).

Uphold based solely on suitability to ATR - either on documentary evidence, or an evaluation of the individuls comments and claims from the POS to reasonable consideration of the circumstances surrounding the sale, by the complaint handler.

Notwithstanding this, why did you buy LCEs in the first place if you had such insider knowledge pre sale (unless it was in general ins, and the life element you claim to know was obtained from product tests polarisation and introduction of regulated prof qualifications). Esp if as you appear to say you knew from the inside what rotten things they, and the industry who sold them, were ? (apart from as you state, those trained by your Co of course)

2sides2everystory wrote: »

Have it your way.

Thats just it and highlights how you are viewing this whole matter. My correction of your asertion that they paid you the shortfall, doesn't mean I'm "having it my way", but is based on fact, and that the basis and calc of your compensation were performed under RU89 and MF - directives designed to recompense the successful complainants for any difference in costings over the period the policy was held as a mge repayment vehicle.

2sides2everystory wrote: »

It made up the shortfall

Purely coincidence - your compenstion was not the difference between the sv and target figure, but based the formula already discussed.

2sides2everystory wrote: »

my mortgage by then had already been made interest only

surely you mean C&I ?

2sides2everystory wrote: »

the cash was simply paid as a cheque for me to do with as I wished

It was actually designed for your to reduce your mge borrowings with it, to put you i the position you would have been if you had effected a C&I mge at outset.

2sides2everystory wrote: »

A while or two after that, I learned how these people weren't long term employees of the insurance companies but a kind of transient complaints force who moved between life insurance companies just like sales forces used to.

They are not employess of the provider, but independent industry consultants, whose services are contracted by the provider to review compliance and complaint issues. (although some of the complaint teams do have employees of the provider - depending upon their own knowledge etc.)

2sides2everystory wrote: »

Helps who? Some poor unfortunate layperson who matches your comments with the line their insurance company has spun them?

Helps give a balanced opinion to your statements, which lack merit and worse still are completely in accurate in a number of instances.

But of course everyone is allowed their opinion on a forum, whether qualified to give it or not - of which the layman needs to know the difference before acting upon, or accepting, improper comments as fact.

Hope this helps

Holly

dunstonh

We have had a Emcas ringing us up stating that they can get us compensation for our mis-sold endowment.

They have popped up a few times on this forum. They have missed the boat for most people given that the majority are time barred from complaint.

He has had the red letters and Nationwide told him verbally that he wouldnt be able to claim.

There you go. Its timebarred.

Just wondered if it is worth our while sending back the forms or to ring Zurich and see what happens.

Zurich didnt sell it so have no liability. So, they will reject the complaint for that reason. Plus, its timebarred so Nationwide, who do have the liability, will reject it,as you already know, its timebarred.

2sides2everystory

It helps if you bloody well clamber off that tatty high horse of yours Holly and listen to elders and betters or at least one-time peers who may have operated in a parallel universe occasionally. You may have collected a few qualifications lately but I was top of the tree qualified nigh on thirty years ago when all this was happening.

I didn't need much regulating because I was fair and principled when I finished childhood and entered adult working life and I worked for a company that believed in those kind of standards for the first few years at least.

There was no regulation prior to FSA 87.

:rotfl: What are you trying to say? That there was no standard being upheld before 1988? Run along ...

I at no time was intending to point the finger at sales persons in particular. There is no point in that. They did what they were expected to do (as life insurance sale types - yes ... the edgier sorts - not quite so easily criticised after the event as double-glazing salesmen, but nearly so, especially if their employers had changed and/or abandoned them. The finger pointing was what the insurance company endowment providers each chose to do after they made board decisions to renege on endowments and the complaints had begun to roll in and they needed someone to blame. "Oh - who was the agent/salesperson? - they must be the one who mis-sold it if your complaint is upheld"

This really was never a straight mis-selling scandal, just an industry scandal where insurers one by one became no good for their word - pretty scandalous for an industry that does nothing else than make promises for money, wasn't it? Never mind all the flannel that dunstonh chooses to put around the investment climates the poor providers had to endure


I have never had a Capital & Interest mortgage.

My point was that by the time I had twisted the provider's arm and extracted compensation for my pre-1988 endowments, I had long previously remortgaged more than once and the endowments were no longer formally linked to any mortgage. My mortgage was interest only. If you were in the industry then, you will recognise that characteristic as evidence of yet another industry dumbing down - delinking of the means to pay off the mortgage created deniability that the endowment and the interest only loan were part of the same product i.e. a viable mortgage arrangement.

Yep I was trained in the products in the early 80s when actually I was even permitted to sell them for a while but it was not my main bag and I don't believe I ever did. I carried a product rating book in my briefcase if that helps!

Who said I wasn't a salesperson? I sold and advised upon rather more meaty and intricate insurance products where I received a decent salary and interesting promotions not ridiculous levels of commission such as was shared out between life insurance salespersons and their building society or other agency mates (over 100% of annual premium in some cases IIRC plus what you now call trail commission).

I haven't a clue what RU89 and MF are and have not the slightest intention of finding out. If they figured in the insurance company side of the terse negotiations that eventually yielded my compensation then they at no stage had the temerity to officialise it or I might have told them where to stick it. I can tell you this:

Those two terms did not appear in the wording of any product I purchased so they are manufactured industry terms to lend credibility to the methods devised to manage a scandal.

Reattribution is probably a word from the same stable - no such word ever appeared in any of my With Profits policies but the industry nevertheless dreamed it up and started applying it to my policies like it was a decent industry term whilst they presided over a different scandal but one not too distant from the endowment book. In fact reattribution is throughly indecent of course, and likewise I could give two hoots for your RU89 (no I am in my 50s) and no I would not dream of being an MF.


Where have I said these products were "knew they were throughly flawed and not fit for purpose"?? I'll grant you that the companies seling them turned out to be not fit for purpose because they reneged.


Lovin' your "independent industry consultants" whose services are contracted by the provider to review compliance and complaint issues. I am sure they were/are by now marvellous types indeed. Mercenaries who eventually created systems that coined concepts like RU89 and MF no doubt, but marvellous types, surely? Gods even? They even said yes or no to misselling claims - oh my - feel the power :rotfl:

Hope this helps lend balance to your high horse guff