Endowment shortfall advice please

chirpy999

Hi, I have been paying since may 1986 to a legal and general policy to repay a £17750 mortgage in may 2011. Every year till now I have had a plan on track letter , yesterday I get one that says there is a risk of it being short By £950 when it matures. This seems a bit rich because i thught these policies smoothed out the good and bad years to be a consistent product. If it does fall short finding the money weont be a prroblem but is it worth putting in for compensation, and if so who should I use??? Any suggestions.

Thanks


Dave

dunstonh

This seems a bit rich because i thught these policies smoothed out the good and bad years to be a consistent product.

The policy does no such thing. There are certain funds that do have an element of smoothing and you could be in one of those but you dont say.

However, the problem isnt due to smoothing or lack of.

If it does fall short finding the money weont be a prroblem but is it worth putting in for compensation, and if so who should I use???

A shortfall is no grounds for complaint. It would be rejected on that basis.

Tessmaz

Hi Dave,

My dad has had exactly the same problem with L&G. He too took the policy out in May 1986 due to pay off May 2011, like you he also has had letter every 2 years saying its on track and this week has had a letter saying its now at a shortfall of either £1300 or £1800. The letter also states ‘it assumes their charges’. He has contacted L&G to ask for a full breakdown of ‘their charges’ and why it now has a shortfall just over a year before it’s due to be paid off! Like you it’s not a problem to find this extra amount to pay off the shortfall but he is unhappy with this situation. Not sure anything can be done about it but it just seems add that you are in the exact same situation and I’m sure there are many more. Can a compensation claim be made against ‘their unfair charges’ like the banks?

If you hear anymore please let me know & vice versa…

Pigman

Snap !! Mine was purchased in 1985, told in June 2008 that it was "all green and ontrack" to return a modest surplus (policy £30k, projected final amount £31.4k) only to just get a "red letter" a year later telling me it could be as much as £2.9k short !!!! :mad:

I know endowments are flaky, but there are limits !!! I'm shifting mortgages around now to cover the shortfall - the policy has been transferred into my sole name now following my divorce a few years back but covers the ex's life......................hmmmmmmmm now theres a thought :rotfl:

dunstonh

He has contacted L&G to ask for a full breakdown of ‘their charges’

Charges that havent changed since he took it out. So, that wont make any difference.

and why it now has a shortfall just over a year before it’s due to be paid off!

You may have heard about the global recession and credit crunch.

Like you it’s not a problem to find this extra amount to pay off the shortfall but he is unhappy with this situation.

Even with a small shortfall of £1300-1800, he is probably still better off than had he gone repayment basis. So, tis not all bad.

Can a compensation claim be made against ‘their unfair charges’ like the banks?

You mean like the case that the banks won?

paul0evans1

The thing about these things is that they were often sold to people (like myself) who aren't finance experts. I was told - verbally - that my endowment was 'absolutely guaranteed' to pay off at least the £50k and that really it was going to massively overperform. In the late 1980s that was a common assumption. I was told that the 'guaranteed death benefit' meant that there was no danger of me not having the £50k and I was told that this was a guarantee. I didn't really understand what an endowment was and like a lot of people, I was sat beside a desk and a presumptive sell was being done on me - the forms were being filled in while we were talking and I wasn't given time to read it or a cooling off period or advice on where to go to get alternative advice. I wasn't given any literature to explain it and I doubt if I'd have understood it if I had.

The bloke who sold me the scheme is long-gone now and the burden of proof is on me to prove that he said what he said as far as I can see.

This isn't an uncommon story either - but lets not pretend that this market is a 'buyer beware' one. It's one that is run by wide-boys and mis-selling was (and for all I know, probably is) endemic.

sheslookinhot

Death during the endowment term would certainly have paid out the 'guaranteed death benefit'.

dunstonh

sheslookinhot wrote: »

Death during the endowment term would certainly have paid out the 'guaranteed death benefit'.

funny that. Who would have guessed from its name

Tessmaz

dunstonh wrote: »

You may have heard about the global recession and credit crunch

Erm...I believe we have ALL heard of the global recession & credit crunch!! Funny how it survived the last one tho in 1991!!

Tessmaz

What everyone is mostly annoyed at is that for 24 YEARS it's been happily plodding along (taking the money off everyone) saying 'yep it's all on track' then bang the last & final year 'oh by the way now it's not'...It's just typical of this country wanting to take everything from the hard working British man...the fat cats win again!

dunstonh

Funny how it survived the last one tho in 1991!!

Hardly on the same scale and the impact on the stockmarkets was very low.

The last 3 major FTSE100 drops were Oct 88 (33% decline), dot.com and US accounting scandals 1999-2003 (43% decline) and the credit crunch/global recession (42% decline). The 90s saw significant growth on the stockmarket and the worst declines in that period tended to be low teens. In other words tiny. Indeed, the growth in the 90s followed by the two massive drops in the last 10 years are the main catalyst for why so many endowments have failed to hit target despite decades of paying out big surpluses.