CIS Endowment Maturity amount? & Miss-sold?

dunstonh

Im out of date on this......are misselling claims now timebarred?

3/4 of mortgage endowments are now time barred but savings endowments are not because they dont work the same way.

There is your misselling grounds. If you have it in writing or can prove this in some way, your case is home and hosed.

If you have evidence, sure. However, there wont be (unless the sales rep was really really stupid). And as you say, the FOS can be a bit hit and miss on these. However, they will rule on the basis of attitude to risk. Not whether the product has fallen short of expectation.

Froggitt

Indeed. So OP, how invested was your OH in the stock market and similar investments at the time? Or was a premium bond the most risky investment? All helps to show attitude to risk.

kevinthecaravan

With regard to attitude to risk, my wife has never had anything other than building society savings.
Is it worth persuing?

dunstonh

kevinthecaravan wrote: »

With regard to attitude to risk, my wife has never had anything other than building society savings.
Is it worth persuing?

Everyone has to start somewhere and these savings endowments in with profits back then were considered low risk. So, unless your wife says she was high risk or no risk then the FOS won't entertain that. If she says she was no risk, she would have to prove it. Generally, the FOS take the stance that most people are cautious/low risk unless proven otherwise. Someone starting out with a long term saver plan at that time would be cautious to medium so you would need a pretty good reason for disagreeing with that.

magpiecottage

I agree with DunstonH. It is most unlikely that you would have a complaint about a with profits savings endowment sold in 1996 upheld on risk because they were seen as low risk.

A claim that a long term savings plan was not suitable seems unlikely to hold water since it has been running for 15 years.

In theory, you might be able to prove a guaranteed payout but unless you have documentary evidence it is unlikely.

In 1996, CIS, in common with other providers, would have provided a personal illustration which would have shown what you might get with returns on the underlying investment of 5% and 10%. It would also have included a caveat that these were not absolute maximum and minimum amounts.

There is a fair chance that CIS has retained a copy of this.

The adviser would also have povided with a "Key Features" document which explained how the eventual benefits would be worked out.

So I think you will have an uphill battle getting a complaint upheld.

On the other hand, inflation has been lower than was anticipate at outset, so although you might have a smaller number the buying power of what you do get will be greater.

dunstonh

On the other hand, inflation has been lower than was anticipate at outset, so although you might have a smaller number the buying power of what you do get will be greater.

Thats the peculiarity of endowments. Had the old high inflation, boom/bust economy continued, most endowments, if not all would have continued paying surpluses and exceeding expectations but you would actually be financially worse off.

terryw

dunstonh wrote: »

Thats the peculiarity of endowments. Had the old high inflation, boom/bust economy continued, most endowments, if not all would have continued paying surpluses and exceeding expectations but you would actually be financially worse off.

Thanks for your post Mr D. Unfortunately I do not understand it at all. Please elaborate. Thanks.

dunstonh

terryw wrote: »

Thanks for your post Mr D. Unfortunately I do not understand it at all. Please elaborate. Thanks.

The sustained period of low inflation and steady economic growth made more households financially better off in a range of areas (house price, savings rates that beat inflation, lifestyle improvements etc) than had it been 80s style boom/bust. Just look at the interest rates and mortgage payments in previous busts compared to what we have been paying.

Endowments were priced and had target investment returns based on an economy with higher inflation and a tendency to boom/bust. When that didnt happen, they couldnt meet their targets. Ironically, the last people to set up endowments in the late 90s and early 2000s could actually find recent events work in their favour and they could end up with decent surpluses potentially.

The other thing to note is that most endowment mortgages paid less in monthly cost than a repayment mortgage. If your difference was £15pm over 25 years then thats a £4500 saving. So, if your endowment fell short by £3000, you were still better off. And I bet £15 pm 25 years ago was more important than £3000 now for many people.

A lot went wrong with endowment mortgages but a fair chunk of it was the right idea but implemented the wrong way and the biggest failing in my opinion is that when interest rates dropped and it was clear returns were not going to be enough, people were not encouraged to put some of the monthly saving aside to cover the fact there may be a shortfall. People were saving £100, £200pm, some much more, with low interest rates but putting aside £20-£30pm of it would have been all it took.

terryw

Thanks for taking the time to reply. Your explanation is very clear.

Dick_here

There is now a more recent (1 April) bonus announcement, a 25 year maturity has actually increased slightly this time

http://www.cfs.co.uk/servlet/Satellite?c=Page&cid=1263305237429&pagename=Corp/Page/tplCorp&currart=1273046001244&currmth=4