HELP!! - mis-sold equity release scheme?

jtb_yorkshire

Dear Forum members,

can anyone kindly offer any advice on pursuing a mis-selling claim on an Equity release scheme?

The product was sold to my parents in 2002. It is by an approved provider, so not the worst.

However I am sure that while my parents understood that the loan money would ultimately come out of the equity on selling the house I know that they did not fully appreciate the effect of compound interest and I think that the early repayment aspect (which may now be chargeable)was glossed over.

Can anyone advise if there is any likely redress or mitigation on the amount owing and also can anyone tell me the current status of the 6% Treasury 2028 gilt yield to which the loan is apparently linked?

This gilt yield aspect of the loan is particularly unfathomable to anyone not financially qualified.

Many thanks in anticipation to anyone who can assist.

JTB

jonesMUFCforever

Who is worried here your parents or do you see your inheritance shrinking?

Sorry if that appears blunt - did you help them when they took the equity release?

Can you give us any reason to think it was missold?

Emmzi

were you parents of sound mind

were they given a full explanation - something like a "key features" document?

did they have time to think about it

did they have legal advice

jtb_yorkshire

Jones in response to your reply:-

Equally bluntly in response I don't give a s*** about my "inheritance", mainly because there wont be any either way. Not really sure what that has to do with it. My mother is aware of the amount owing but she doesnt know about the possible early repayment penalites as I do not want to worry her unneccessarily, she is quite ill.

My Father has since died, I know he would be utterly horrified if he could now see the interest that has accrued on this loan in such a short space of time.

What I do care about is my parents hard earned cash feathering the nest of some global institution at extortionate interest rates for a product which they did not fully understand.

Yes, I checked out the equity release scheme when they took it out to make sure it wasn't from some very dodgy provider which evidently it is not. Even I did not pick up on the fact however that the compound interest would accrue so spectacularly - or about the so called investment protection clause which is basically yet another licence to print money by insurance companies, I personally think its scandalous.

The reason I think it was missold is simply that I am absolutely sure they would not have understood the actual financial consequences of the loan.

Emmzi in response to your questions:-

Yes, yes , yes and yes.

So probably not much of a case then?

jonesMUFCforever

You are correct - no!

CLAPTON

from what you have said it would be difficult to agrue that they were provided with insufficient info to justify a mis-selling case
what was the sum borrowed
how much interest has be accrued in 8 years?
what is the early settlement figure

Emmzi

if they were sane and were given all the info - you have no case. sorry.

margaretclare

The reason I think it was missold is simply that I am absolutely sure they would not have understood the actual financial consequences of the loan.

Why not? Are they stupid? It's not THAT difficult!

What may have happened is that the interest rate at the time was fixed. It may have been thought that this would protect against the rates going sky-high, as will have happened in your parents' lifetime - I was paying 15% back in 1990. If the rate had been variable i.e. tied to the Bank Rate, they would have been far better, because now the BR is so low.

We did equity release in 2003 and we're still happy with it. Our interest rate was pegged to the BR, went up at first but then went down, and down...

We are guaranteed 'no negative equity' and to be allowed to live here as long as we want to, or to move if we choose. Our conveyancing solicitor had a check-list of points to go through to ensure that we were fully aware of all the implications. He said that he was obliged to do this.

Fiddlestick

jtb_yorkshire wrote: »

The reason I think it was missold is simply that I am absolutely sure they would not have understood the actual financial consequences of the loan.

That doesn't mean that it was missold, more that it was "misbought".

If the provider explained all the implications and handled all the paperwork and selling process correctly, then you don't have a leg to stand on.

hugheskevi

can anyone tell me the current status of the 6% Treasury 2028 gilt yield to which the loan is apparently linked?

You can get information about the latest yield and price on the BBC website here.

Presumably the interest rate is set at a premium over the yield on the gilt? Something like GRY+2 percentage points for example?

jonesMUFCforever

Hindsight is a wonderful thing - nobody but nobody could have guessed in 2003 that base rate would be .5% today.
Yes OP's parents are paying a lot more than they should now but going back to 1992 base rate was 15%!