pathetic endowment compensation

Barkingrabbit

I went through the entire process to complain to Barclays about my 2 Friends Provident endowments. This as many of you will know required considerable hoop jumping and searching through old paperwork.

1 was for £28500 taken out in 1987 and the other £3000 taken out about 3 years later. Both have significant shortfalls.

2 days ago I was offered......

£75 compensation for the £28500 one and £65 for the £3000 one!

Although they are offering to pay some of my mortgage off....it seems really low compensation. I have been in touch with the FSA to see if they can do anything.

Has anyone else had such low compensation offers?

hethmar

I had 5 standard life policies. The first two sold to me by Cheltenham and Gloucester BS - that totalled about £9k and they have offered £320 final offer.

The third Standard Life are saying I bought direct, which is nonsense - it was 20 years ago and either the TSB manager who arranged the mortgage or our solicitor set it up - it wouldnt have occurred to us to add another policy.

The last two and the biggest were through an IFA who went out of business 6 years ago. I think the words snowball and hell come to mind with that one as they apparently did not have any sort of default insurance.

EdInvestor

hethmar wrote:

The last two and the biggest were through an IFA who went out of business 6 years ago. I think the words snowball and hell come to mind with that one as they apparently did not have any sort of default insurance.

https://www.fscs.org.uk should be your next port of call assuming the policies started after 1988.


Barking rabbit

The redress is only supposed to put you in the position you would have been in if you had instead used a repayment mortgage.It's not supposed to meet a shortfall.

So what you need to look at, is the position after you

1.Surrender the endowment
2.Use the proceeds plus the redress money to reduce the capital owed on the mortgage
3. Remortgage the remaining amount to repayment, upping the monthly payment by the amount formerly paid as the endowment premium.

Will this result in you paying off your mortgage on time?

It should come close, though it does depend on what interest rate deal is available.

Suggest you see a mortgage broker.

dunstonh

£75 compensation for the £28500 one and £65 for the £3000 one!

It means that endowments are only a little off track to where you would have been on a repayment mortgage. You are only £75/£65 out of pocket.

Although they are offering to pay some of my mortgage off....it seems really low compensation. I have been in touch with the FSA to see if they can do anything.

The FSA will do nothing.

It isnt compensation. It is redress compared to put you in the position you would have been if you had a repayment mortgage. The redress takes the surrender value of the endowments into account so you need to add that on to your redress values.

Has anyone else had such low compensation offers?

Yes. Lots of people are now getting no redress paid or much smaller amounts than if they had complained 3 years ago as investment returns have picked up. I know of one case where someone got 96p redress but used a claims company and now has to pay the claims company over £800.

1 was for £28500 taken out in 1987 and the other £3000 taken out about 3 years later. Both have significant shortfalls.

They dont have shortfalls. The projections using defined rates which may or may not reflect the actual performance of the underlying investments within the endowment show a potential shortfall. The projections could be understating or overstating the likely returns and are not reliable as a single source of information when looking at the quality of your endowment.

Barkingrabbit

Thanks for the explanation, much clearer than Barclays explanation. I get it now, and will probably accept their offer.