Help - is my endowment compensation fair

Mikeymikes

Please excuse me for being a bit thick regarding this and I did find a similar topic but was couldnt find how to post a question.

I have had an endowment policy for 10 years which was to cover a mortgage of £30,000. 2 years ago we moved and swapped to a repayment mortgage but wished to keep my endowment policy on as a savings plan.

When the last projections came in there was a shortfall of £10,000 and so I complained. It was with Lloyds TSB. They have offered me a disappointing £1272.58 in compensation and a surrender value of approx £4500. And have only taken into considerationt he time that the policy was linked to a mortgage (eg they have disregarded the last 2 years in their calculations). This is their only and final offer

Does this sound fair? or do you think that I should take this to the banking ombudsman.

Thanks

Mike ::)

moneybags_3

Hello Mikeymikes

Just a comment. I had 2 endownments with L & G to cover 43,000 pounds to mature in 2019. The policies were performing very badly, so I surrendered them. I got back 3,000 in compensation and a surrender value of around 6,000 for the 2 policies.

Ludders_2

There are strict rules governing the calculation of compensation. It is very unlikely that the bank would not follow the rules to the letter. Compensation is designed to put you in the same financial position you would have been in if you had not received poor advice. In your case it would be the difference between a repayment mortgage and the endowment mortgage supplied. If when the two were compared you were at a loss the appropriate amount would have been offered to you.

Mikeymikes

Thanks for the advice. I figured they would follow their code to the letter. Just didnt realise it would fall so poorly in the consumers favour.

Thanks again

Ludders_2

Sorry Mike but the compensation does not 'fall so poorly in the consumers favour', it is calculated to put you in the correct position, to cover all losses you have suffered and not to put you in a profitable position!

dunstonh

Also remember that for a good period of time, endowment and interest only mortgages were cheaper than capital repayment and life cover. This would reduce your payout down if you had hte mortgage during this period.

chubbybrown4real

I recieved minimal compensation,they only have to make good the mistake no more,no less.

But considering they didnt deduct the cost of the life cover through the period you cant complain really.....


chubbers

Mikeymikes

Thanks for the comments.

I still feel it falls poorly in the favour of the consumer. I maintained the plan for two years as part of a savings plan after it had ceased to be linked to a mortgage. This 2 year period has not been taken into account during the calculation of the compensation. Whilst I agree with Ludders, they have probably followed their compensation practice to the letter, they are only paying you back what they have had from you - and not a percentage of the profit they have made from you whilst they mis-sold a product that was wholly inadequate.