Misold endownment fault, Building Societry or lender?

BML

My son-in-law has just reached the end of the loan term on his house and obviously the endowment did not reach the amount owing although by not a great amount. He tells me that when he bought the house he was told by the building society that he sought a mortgage from that he would only receive a mortgage if he accepted an endowment mortgage. When he approached the lender he was told that the endownment would not only pay pfff the mortgage but he would also recive a lump sum.
In the event that he attempts to obtain compensation who should he contact the building society or the lender?

ILW

He must have received a load of warning letters with advice, what did he do to mitigate the situation?

Annisele

I'm confused - he sought a mortgage from the Building Society, but the lender is somebody else?

So far as the endowment policy is concerned, if he thinks that was mis-sold he should complain to whoever sold it to him. (If he doesn't know who that was, the endowment provider will be able to tell him). There's a reasonably good chance that he's too late to complain, but he won't know that unless he tries.

If he thinks the mortgage was mis-sold, he should complain to the mortgage lender.

However...if the endowment complaint was uphold, redress would be to put him in the position he would have been if he'd taken a repayment mortgage from outset. The endowment might have been cheaper overall than a repayment mortgage, and if the shortfall at the end was small he might not have made a loss, so no compensation would be due.

It is very difficult to show that a mortgage was mis-sold - especially as it was presumably taken out 20/25 years ago, when the regulatory environment was very different. If he wants to argue that he was refused a mortgage unless he took an endowment, then a) he could have gone to another lender, b) it's his word against the lender's, and c) as above, his loss might be very small or zero.

Incyder

ok
I was sold an endowment policy backed mortgage.
The halifax sold it to me and arranged it all.
The endowment policy was with standard life.

When the policy was failing to be on track to pay off the mortgage, I complained to halifax for selling it to me.

They then passed me on to standard life.
As it was their policy they agreed it was mis-sold and they gave me 7k compensation.

I must add that my complaint was upheld for 5 reasons why it was mis-sold.

1) the halifax did not offer me a repayment mortgage.
2) the halifax did not offer another providers endowment policy
3) the halifax did not mention that the policy may not grow enough to settle the debt.
4) As I was single I didnt need the life cover so should not have been sold it.
5) I was promised a terminal bonus but this was not guaranteed and should not have been promised.

Hope that helps.

p.s, Halifax and I are not friends anymore, although Howard does pick me up on Thursday evenings for Darts at the Frog & Radiator. :rotfl:

opinions4u

BML wrote: »

My son-in-law has just reached the end of the loan term on his house and obviously the endowment did not reach the amount owing although by not a great amount. He tells me that when he bought the house he was told by the building society that he sought a mortgage from that he would only receive a mortgage if he accepted an endowment mortgage. When he approached the lender he was told that the endownment would not only pay pfff the mortgage but he would also recive a lump sum.
In the event that he attempts to obtain compensation who should he contact the building society or the lender?

Names and dates please.

When was the policy bought?
Who sold the policy?
What warnings about underperformance have been provided by the life assurance company?

BML wrote: »

My son-in-law has just reached the end of the loan term on his house and obviously the endowment did not reach the amount owing although by not a great amount. He tells me that when he bought the house he was told by the building society that he sought a mortgage from that he would only receive a mortgage if he accepted an endowment mortgage. When he approached the lender he was told that the endownment would not only pay pfff the mortgage but he would also recive a lump sum.
In the event that he attempts to obtain compensation who should he contact the building society or the lender?

Incyder wrote: »

ok
I was sold an endowment policy backed mortgage.
The halifax sold it to me and arranged it all.
The endowment policy was with standard life.

When the policy was failing to be on track to pay off the mortgage, I complained to halifax for selling it to me.

They then passed me on to standard life.
As it was their policy they agreed it was mis-sold and they gave me 7k compensation.

I must add that my complaint was upheld for 5 reasons why it was mis-sold.

1) the halifax did not offer me a repayment mortgage.
2) the halifax did not offer another providers endowment policy
3) the halifax did not mention that the policy may not grow enough to settle the debt.
4) As I was single I didnt need the life cover so should not have been sold it.
5) I was promised a terminal bonus but this was not guaranteed and should not have been promised.

Hope that helps.

p.s, Halifax and I are not friends anymore, although Howard does pick me up on Thursday evenings for Darts at the Frog & Radiator. :rotfl:

While 4 of the 5 points you make stand up, number (2) is open to question. If it was bought when Halifax were a tied agent of Standard Life they wouldn't have been allowed to offer you a policy from anybody else. I assume this complaint pre-dates Halifax's tie up with Standard Life and also pre-dates the Financial Services Act. In other words, you could very easily have ended up with nothing if Standard Life had refused to consider the complaint.

Incyder

My complaint was settled in march 2005, right in the middle of the endowment mis-selling scandal.
I only needed to prove 1 point to prove mis-selling.
I produced 8 points but only 5 were agreed by standard life.
If they had not agreed to at least 1 then I would have used the ombudsman service and would very likely have won through them.

dunstonh

When he approached the lender he was told that the endownment would not only pay pfff the mortgage but he would also recive a lump sum.

So, 25 years ago he remembers what was said. Lets look at the following two statements. One is mis-sale. One is acceptable

1 - When he approached the lender he was told that the endowment would not only pay off the mortgage but he would also receive a lump sum.
2 - When he approached the lender he was told that the endowment could not only pay off the mortgage but he could also receive a lump sum.

All these years on, is it actually possible to remember?

In the event that he attempts to obtain compensation who should he contact the building society or the lender?

Over 3/4 of endowments are now time barred from complaint. So, the first thing to do is find out from the endowment provider if it is timebarred. If it is not timebarred then the complaint goes to the retailer that provided the advice. That could be the building society if it was one of their agents. Or it could be an IFA, solicitor or accountant if it pre dates the period when the building society tied themselves to one provider. If it was taken out before April 1988 then the options may become less as IFAs, solicitors and accountants do not consider complaints on products taken out before regulation. Most building societies do though (if it was them that actually have the liability).

I must add that my complaint was upheld for 5 reasons why it was mis-sold.

1) the halifax did not offer me a repayment mortgage.
2) the halifax did not offer another providers endowment policy
3) the halifax did not mention that the policy may not grow enough to settle the debt.
4) As I was single I didnt need the life cover so should not have been sold it.
5) I was promised a terminal bonus but this was not guaranteed and should not have been promised.

Thats not right. A tied agent cannot offer another provider's policy. If they did then that would be a rule breach. So, number 2 is not a valid complaint reason. Number 4 often fails as well as products from that period often forced you to have that whether you needed it or not. A pure term assurance would be a mis-sale in that case but an endowment would depend on the other reasons.

I suspect that you gave those reasons as why you felt it was mis-sold and Halifax agreed it was mis-sold but didnt specifically say why. Its common for them to say it was mis-sold but not say why or only give one reason (or even more common to say there was insufficient evidence to say if it was sold correctly and offer redress without saying it was mis-sold). If they agreed that point 2 was a reason then its an error by the complaints handler at Halifax.

McKneff

Am I not right in thinking that we didnt receive compensation, as such, the payment was made to bring you back to the same financial situation that you would have been had you been paying a repayment mortgage. At least that was my understanding at the time we received our cheque.

As Dunstonh says, 75% of cases are time barred.
Your son must have had a letter each year so has had plenty of time to do something about the situation.

dunstonh

Am I not right in thinking that we didnt receive compensation, as such, the payment was made to bring you back to the same financial situation that you would have been had you been paying a repayment mortgage. At least that was my understanding at the time we received our cheque.

Correct. If you used the redress payment and paid into the mortgage and switched to repayment mortgage then you would have been in the same position had you been repayment from the start. Often that still meant your monthly cost went up as endowment mortgages were typically around 10% cheaper pm average. - a very common reason why people took them out. Not some potential investment gain in future but because it was the cheaper option.

I dont know if matured endowments are allowed to factor in the monthly cost saving in any redress payment. In theory if was say £15pm cheaper then over 25 years you have paid in £4500 less than a repayment mortgage. So, if the shortfall is less than £4500 in that case, then you are financially better off.

BML

ILW. He must have received a load of warning letters with advice, what did he do to mitigate the situation?
Like many young men he hoped it would get better and di nothing about the warnings.
Annisele. Confused.
So am I but I do not work in the financial sector. I hope I have got this right but my understanding is that he saw a house, went to the Estate Agent who told him to see a Building Society, he went to Nationwide who told him that they would only offer him an endowment mortgage and he finished up with one from Scottish Amicable. I have to say that many years previous to that I bought my first house with a Scottish Amicable endowment mortgage and it did pay out quite handsomely.
Opinions.
The policy was bought 25 years ago. I really do not know who sold him the policy. He says that Nationwide told him that they would only offer him an endowment mortgage and he finished up with one from Scottish Amicable. As to who sold it, Nationwide or Scottish Amicable I am not being obtuse but I really don’t know. What I do know is that he owes money to Nationwide because of a shortfall of the Scottish Amicable policy
Dunstonh.
“All these years on, is it actually possible to remember?”
I think that sometimes it is. I drafted a letter for my son-in-law to Prudential and they replied within a few days and we are not looking at the forms from the ombudsman

Thank you all for the information and advice. We do live in a complicated world don’t we. I am 75 and when I bought my first house one trusted Banks, Building Societies and the like and one never heard terms such as, “commission or service charges”. It looks to me that my son-in-law was sold what gained the most commission for Nationwide. I think that these days house buyers are much more clued up about such things.

dunstonh

As to who sold it, Nationwide or Scottish Amicable I am not being obtuse but I really don’t know.

Probably neither. I dont recall Nationwide being agents of Scot Am. However, I could be wrong. Scot Am were not big on the sales agent front so it could well have been the estate agent or the solicitor or what is now an IFA or it could be a local arrangement that the Nationwide had with a local firm.

A complaint is being made against the person that sold it. The lender is not responsible for that nor is the insurer unless it was sold by an agent of theirs.

What I do know is that he owes money to Nationwide because of a shortfall of the Scottish Amicable policy

Which isnt grounds for complaint.

He could ask Scottish Amicable who the servicing agent is. Assuming he has never appointed a new servicing agent then it would remain the initial "seller". That would tell you who the liability is with. However, if it is an accountant, solicitor or what is now an IFA or an estate agent (or a firm that no longer exists) then its end of the road as it was taken out pre regulation. Only if Nationwide or Pru were the agents would they consider any complaint.