Colonial (now Winterthur) misselling

wallyberry

Has anyone got any ideas that might help me?

In 1992 my now husband bought a new house and was sold an endowment policy from Colonial, who are now owned by Winterthur Life. It was before my time with him, so I was not party to what was going on. He was told, verbally, that the policy would certainly pay off the mortgage of £44,000, but the paperwork he signed says otherwise. We complained to Winterthur on a number of grounds, one of which being that as a single man with no dependents, at the time he did not need a life policy. They said that since the mortgage was taken up by the Leeds, then by the Northern Rock, a life policy was needed, but no reason was given as to why.

I have a few problems with it. One thing that puzzles me is this: Surely if he'd had a repayment mortgage, and walked in front of a bus and got killed, the Leeds or NR would have got the house anyway.... THe mortgage wouldn't have needed to be paid off...

Also, Winterthur say that endowments are or were considered a suitable investment for those whose attitude to risk is cautious, and in the fact find he was assessed as a moderate attitude. What are the criteria for this?

One more thing. AT the time Colonial sold the policy, it would appear that their investments were running at about a 3% return. Surely then it is immoral and misselling to sell a policy based on a 8.75% return they must have known was a pipe dream even then? Even if it was a LAUTRO figure.

I gather that at the time their practices were already under investigation by LAUTRO....

I'm thinking of taking it to the FSA, since we have a projected shortfall of £20000 and we have two small children who need a home. Obviously we're taking steps to make good the shortfall, but it's not easy with a young family.

Has anyone had any experience of complaining to Winterthur, or got any comments/suggestions? I'd be grateful for any help and advice.

Wallyberry

defender_of_the_weak

More standard industry guff I'm afraid.

Attitude to risk is generally based on your husbands circumstances with moderate meaning he was happy to take some risk that the endowment would not pay off the mortgage at the end of the term. It was publicised recently by the Ombudsmans office that they would probably expect to see some form of supporting evidence such as previous investments or savings in support of such a position.

Take it to the Ombudsman and specifically raise the issue of risk and no need for life cover

wallyberry

Thank you so much for your help. I'm pretty sure that he's never invested in anything similar and the only savings he'd have had would be a bank savings account with nothing in it! I'd never have thought we could prove that he wasn't a moderate attitude, so thank you so much!

ant99_2

Hi there,

Please post the result of your FSA claim. We have 3 individual policies with CM (Winterthur) that should cover 47k but are projected at 27k. These began 1991, 1993 and 1998. We were classified as "cautious" attitude to risk but were sold with-profit endowments. I stressed this attitiude to risk to both Winterthur and FSA but both rejected claiming that I was sold an appropriate policy each time. Hope you get better luck.

J

wallyberry

Will do. We've completed the forms for the ombudsman, but I can't send them off until I can find or replace the last mortgage statement (why is it always the one thing that you need that you can't find...?), and as soon as we've got that it will be sent off. The Ombudsman says it can take months to deal with the claims because there are so many, so when I finally hear something I'll post.

Your rejection sounds odd, because the ombudsman definitely says (now I've seen it for myself) that they would expect to see some prior experience of investing.

In terms of our claim, it seemed that if the worst that could happen was that we'd spent an hour or two filling in forms and finding back up evidence, and then they said no, we hadn't lost much. It seemed worth a try! We're hoping, but not really expecting, because although we know it's justified, it's very hard to prove.

Thanks for your good wishes.

EdInvestor

You don't have to prove anything.

It's the company that has to prove they made a proper sale.

Quite often they can't do this because they have destroyed your file. So you win by default.