Abbey Life - Shortfall.

denhoren

Hi,

New to the forum and after some advice please.

In Aug 1993 the wife took an endowment out for 30k to help pay off the mortgage when it matured.
In 1998 she was advised of a shortfall and subsequently added another policy with the same company to top it up.

In 2001 i got promoted and changed the mortgage over to repayment ( 29k left) and we decided to keep the endowments going as a kind of savings fund , that would hopefully pay out a decent sum upon maturity.

When the high risk of short fall letters came we contacted Abbey Life to say that we were not happy with the way the policy was sold to us ( broker who did home visits who has since left the company).

They advised that because switched from endowment mortgage to repayment that we are not eliglbe for any kind of compensation and neither will they investigate the policy.

As of today the projected short fall on the 30k is about 11k , thats on the assumption that it stays at 4.7% .

6% = 10k short fall , 8% = 7k so no matter what i think we are going to come up short.

I am quite mad that even though we have a small amount of mortgage left , with only 8 years left on it , if it wasnt for the fact that we had the forsight to swap to repayment , then we would be in the poo!

Is there anything that i can do.. i know we should have probably acted sooner, but the shortfall amount seems to be increasing yearly and i would have expected to atleast get back more than what we have paid in.. which seems unlikely!

Any suggestions greatly appreicated, and applogies for any spelling mistakes.

Thank You

dunstonh

You have three years from first being notified of a high risk of a shortfall to make a complaint. So, that time has long gone. However, you say you raised it with them before. So, you get a different time bar. That is if you are not happy with their response to your complaint, you have 6 months to refer the case to the FOS. If you do not refer it within that 6 month period then the complaint is closed and cannot be reopened unless significant new information comes to light.

The rules are that if you complain about an endowment and the complaint is upheld, the redress calculation is based on the date the endowment was last used in conjunction with a mortgage. So, as you ceased to use the endowment for that purpose in 2001, they would use that date. As that is just about the time endowments started to cease surplus figures and go into shortfall, it is possible that you were not entitled to any redress at that time.

6% = 10k short fall , 8% = 7k so no matter what i think we are going to come up short.

Maybe but maybe not. Endowments dont get staight line growth in the way the example projections show. For example, over the last year you probably saw your investments grow 25-40%. You won't get that every year but "historically" you are more likely to get better years following a major crash than bad years. Of course history means nothing and future returns are unknown. You probably will come up short but at the end of the day but you may not actually be worse off as endowment mortgages were typically cheaper than repayment mortgages.

I am quite mad that even though we have a small amount of mortgage left , with only 8 years left on it , if it wasnt for the fact that we had the forsight to swap to repayment , then we would be in the poo!

So, why has it taken you nearly 10 years to decide to complain despite having that foresight?

but the shortfall amount seems to be increasing yearly

it shouldnt be. It should have reduced over the last 12 months. Are you working on a recent statement or an old one?

would have expected to atleast get back more than what we have paid in.. which seems unlikely!

are you sure? typically, 25 year endowments break even against what you pay in between years 8 and 12.

denhoren

Thanks for your reply..

given your advice, would you say that it is unlikely that i would get anwhere with a complaint on the misselling of the policy , due to the time period ?

Thanks

dunstonh

would you say that it is unlikely that i would get anwhere with a complaint on the misselling of the policy , due to the time period ?

With complaints its always hard to judge as sometimes those that seem to have a cast iron case get rejected and others that dont appear to have a hope get upheld.

Your best bet is to find out if you are time barred from complaint. You just need to contact them and ask if a complaint is time barred.