Britannia says my Aunt does not have an endowment

jmando

Hi guys,

Please bare with me as this is new to me and I am trying to help my aunt who is a widow in her 60's has no one else really so if ask somethign stupid I apologise.

An interest only mortgage was taken out in 1986 on a sum of £50,000 and she had an endowment as well at the time I believe with britannia in a joint accoutn with her and her husband (who used to deal with it all). The endowment she says was for £50,000

she has paid her mortgage every month since then and it will end in early feb.

Her partner deceased in 1999 and she became the owner of the mortgage etc and continued payments and was actually overpaying and reduced her repyament to £46,000.

She began to worry and contacted the bank about her endowment as she hadn't recieved any letters and information about her endowment etc and they mortgage advisor told her not to worry as she has a £50,000 endowment to mature on jan 2011 etc.

More recently I called the bank (late decemeber) and asked about it and the lady on the phone said yes we have it on file and it is due to mature in 2011, so I told her wait until the end of first week in jan.

We called a mortgage advisor and were told that it had not paid and wait another week as a letter may arrive.

A few days later she recieved a letter saying that she has no endowment and will have to pay the sum of £46,000 before 6th feb 2011.

Me and my aunt met with a mortgage advisor at her local branch and he had a look on account and after some calls something was mentioned on the phone about 9th dec and then he went on to say the policy was paid to someone. He then asked if the MRS or MR had been bankrupt and my aunt said in 1987 he became bankrupt and was settled in 1993.

I then thanked the man for the help and left the bank.

I have spent the best part of this wekk going through old papers and found that her husband had decalred that he did not have a vested interest in the house and as it was a joint account my aunt had never given consent to use the house as collateral.

Another thing worrying is that I did not find anything in the mass of paper about an endowment apart from the first pay in book saying something about "amount insured - 65,000" and a yearly installment.

Could the debtors had taken the endowment even though it was a joint account and they were unable to take the house as it was a joint account?

The bank keeps saying they don't know who the policy is with but I don't know. could that be true?

Is the policy with Phoenix life now? I have been reading online that it may be with them now or have I got the wrong end of the stick?

Also In her accounts in her mortgage account there was a credit of £50000 and a debit of £50000 on the same date, could this mean anything?

That was a long one, thanks for reading any help is greatly appreciated.

opinions4u

Could the debtors had taken the endowment even though it was a joint account and they were unable to take the house as it was a joint account?

Yes. Although your aunt should have received half of any surrender value herself. The problem is, the value in the policy early on would have been very low, so any amount received in the first year or two would have been nominal and forgetable.

The bank keeps saying they don't know who the policy is with but I don't know. could that be true?

In 1986 the sale of an endowment policy usually related to whichever life assurance company rep took the building society manager out for lunch the previous week. The policy could have been with one of dozens of companies.

Back then I would have expected any policy to be legally asigned to the lender. That would mean that they held the original policy (probably with the title deeds) and your aunt would have had a copy of it. If it was surrendered as part of a bankruptcy settlement then I would expect there to be some sort of record of the policy being released to remain with the title deeds.

I think a key thing here is where have the premiums been going all these years? If there's no payment being made anywhere, there is unlikely to be a policy. Additionally, if there was a policy in joint names, surely a claim for death would have been made in 1999. Why wasn't it?

A few days later she recieved a letter saying that she has no endowment and will have to pay the sum of £46,000 before 6th feb 2011.

While that may be technically correct, the lender needs to show a little bit more patience than that! Here's what I think should happen:

1) Your aunt needs to gain lender agreement to continuing on interest only in the short term while the problem is investigated.
2) She needs to ask the lender, at their expense, to check the title deeds (or other records) for any documentation relating to the endowment policy.
3) Assuming this is uncovered, she needs to ask why, if the policy was surrendered, the mortgage remained on an interest only basis. This is important if you're going to succeed with any mal-administration complaint.
4) She needs to ask the lender what they have done to make her aware that the mortgage is interest only and to ensure that she has a repayment vehicle in place.

She should ask that this be recorded as a complaint, even if she considers herself to be asking questions rather than complaining. I'm not entirely sure what the remit of the Financial Ombudsman (FOS) is for any potential maladministration that may have taken place 20+ years ago. It would be worth making contact with the FOS to clarify if it's something that they could look at. If she's not happy with the lender's reponse after 8 weeks, or receives a "letter of deadlock" then she can escalate to the FOS.

My own view is that she should have known that it was an interest only mortgage and made sure that premiums were still being paid to a life assurance company. But a lender's complaints department or, more likely, the FOS, may take a more generous view that the lender should have transferred the mortgage to repayment many moons ago and could even say that their efforts to make you aunt aware of the lack of policy were inadequate. If such a positive response is received there is a slim chance of the whole debt being written off. I wouldn't recommend getting her hopes up that this is a likely or even potential outcome.

Hopefully another poster, Magpiecottage, will be along shortly to build on (or destroy) some of my thinking! My FOS knowledge is more generic - Magpiecottage appears to have a more in depth understanding of the workings of it all.

At this point in time, the debt stands. Assuming, once the complaints process has been exhausted, that remains the case, your Aunt will need to either repay the debt (which may require the sale of the property) or agree a revised term to clear the debt with the lender (higher payments than at present) or remortgage elsewhere - but again with a likely higher payment than today.

Remember, it is possible that an individual in financial difficulties, staring bankruptcy in the face, may have forged a signature to arrange surrender of a joint endowment policy in order to obtain funds to keep creditors at bay. I'm not saying that this did happen, but it's a scenario that is a possibility. It's not something that you're likely to be able to prove one way or the other.

It's also possible that premiums weren't paid and the policy lapsed, or the Britannia forced the surrender of the policy to clear arrears. If the latter, you need to look at why the mortgage would remain on interest only. I suspect the former.

Good luck!

jmando

The fella at the bank said that she would need to pay the final repayment otherwise she would be charged an interest etc and sugggested that we contact the bank and ask them to change to extend the mortgage for another 14 years and change the account to a repayment type.
I am not sure who that will affect things as I thught that will buy her sometime as obviously she doesn't have the money to pay upfront but we can conitune paying until we can figure out what has happened.

Britannia used to send letters saying your remain balance is £xx,xxx of interest and that you need to arrange means of paying the repayment etc, so they covered themselves there.

I agree about her paying paid when the MR passed away, she tried to make a claim of death with Britannia who refused as they claimed she has no endowment policy.
She was always adamant there is an endowment and something is not right so she made sever visits to Britannia and many calls and met with mortgage advisors who all said yes Mrs.x You do have an endowment on file to mature on jan 2011 and not to worry it is all on order and ex employee even wrote that down on a piece of paper in 1997 i think it was I called revently and the same thing was said and many occasion in the past.
So why have they been saying this if in 1999 they said there wasn't? surely soemthing isn't right there.

Even when I met with the mortgage advisor on friday he said something abotu 9th dec (not very clearly as he was speaking to a colleague on the phone) and said that if the MR. had been bankrupt that it is possible someone else has been paid.

Where it gets a bit fuzzy is she doesn't have papers to show an endowment but a premium of approx 350-610 (changes) odd has been leaving her mortgage account for "premium debit" which also gets taxed seperately on the mortgage account statement.

She has shown me pay-in reciepts for paying the bulidings insurance taken from britannia directly to the insurer (BS ltd, in some cases) in monthly installments. She is not aware of having any other insurance, I also checked the mortgage statements and the monies she has been paying in on these cheques and receipets did not go into her account from what I can see.

I have found some papers regarding the proceedings of bankruptcy and even Britannia took my Aunt and uncle to court over not paying £6,700 odd monies but she claims that it was settled as she borrowed money and paid for it but I think I need to look at the court judgment to be honest as it was in 1991. Any where I can check? It is our local county court.

I woudln't mind checking the title deeds and having a copy for myself to be honest as there are some other unrelated matters that she needs it for as well and I was already planning to get them tomorrow. So there would be a mention on them?

The other thing is the debtors did try to make a claim on the house and the trustee at the time placed a caution and inhibition on the title deed (old 1995 copy) which my uncle had removed in 1998 a little before he passed away and I have some letters to prove that too.

Thanks

dunstonh

I'm going to pull a couple of points only as there is a lot above.....

She began to worry and contacted the bank about her endowment as she hadn't recieved any letters and information about her endowment etc and they mortgage advisor told her not to worry as she has a £50,000 endowment to mature on jan 2011 etc.

The bank would only know if an endowment was taken out or not. It would not know if it was still in force. This would indicate that an endowment was taken out at the time.

More recently I called the bank (late decemeber) and asked about it and the lady on the phone said yes we have it on file and it is due to mature in 2011

again that indicates that their files showed it did exist initially.

Could the debtors had taken the endowment even though it was a joint account and they were unable to take the house as it was a joint account?

Remember that in the early years the endowment isnt worth anything and it takes many many years to actually build a value that is even worth looking at. So, going bankrupt in 87, just a year after then endowment was set up, would mean there was no value in the policy and would not have been used. Even by 93, it would probably only have been worth around 3 years worth of premiums if surrendered. I doubt that it would have been used in any settlement.

The bank keeps saying they don't know who the policy is with but I don't know. could that be true?

Yes. The endowment is one thing, the mortgage is another. In that era, they may have taken a name or may have just ticked a box and not noted the provider. They may well have taken a copy policy document after it issued but the need to keep those has long gone and would likely have been destroyed.

I am going to give a guess and you should only take it as that but it is another consideration that could be looked at. For someone to be made bankrupt, that would mean they had financial problems. Those problems would normally go on for a period before being made bankrupt. That typically means that payments get bounced, bills dont get paid etc. So, could that have happened to the endowment policy?

My experience is that with couples, one side may often try to hide the debt situation from each other. I have seen cases where one things everything is fine and the other has made decisions that are just putting off the inevitable. This includes not paying the endowment. Indeed, i had a case a few years back where the wife thought the mortgage was about to be paid but the husband had cashed in the endowment years earlier and only replaced it with a life assurance. The wife had signed the papers without asking what they were for.

It may be worth asking the bank to look at a copy statement for the three months after the mortgage was set up to see if an insurance company payment was going out. That would at least see if one was set up and whom it was with. finding out its status and what happened to it would be easy after that. However, a caveat to that is that you say there was a payment book issued. If that is the case then you should know who it is with as the payment book would give the provider. That would also suggest they didnt use direct debit but wanted to use the payment book instead. So, how many paying in slips have been taken out of the book? That would give an indication of how many payments were made into the policy.

Jenniefour

This may be totally useless but, had your Aunt continued paying into the endowment? Have you checked past bank statements to see if there were any payments going through into the endowment after bankruptcy and/or after your uncle passed away. If your aunt has bank statements going back that far.

jmando

Thanks for the responses so far, they have been really helpful.

My uncle became bankrupt due to a company he had which for the sake of privacy we'll call it "company x Ltd".

They payment book was only a paying in book, perhaps I have worded it wrong but it only shows money and the oldest Britannia statement of hers I can find is 1993 and it mentions fire insurance and repayments only.

After speaking to my aunt today it sounds something odd is happening as she has cashier receipts for her paying buildings insurance in quarterly instalments for the years 2002,2003 and 2005 (these I have found in the mass of papers) but these payments are not reflected in the statements and they have taken one big lump sum for buildings insurance from the interest repayment account.
I need to follow this up with the bank and is it possible to get statements from 1986 to current date? as some are missing from hers.

I thought maybe Britannia did not know about the Endowment but I came across Britannia Life who were once a part for Britannia group which made me think perhaps the policy did originate with them (if it does exist). Or are they two completely different companies?

Another thing was that they guy in the bank said yes there is an endowment and has been paid (unless I totally misunderstood) and said due to my uncle being bankrupt it was possible that it has gone to a debtor and suggested doing a credit check on my uncle but I thought they were cleared 6 years after the bankruptcy case is settled?

dunstonh

My uncle became bankrupt due to a company he had which for the sake of privacy we'll call it "company x Ltd".

If it was a limited company then why did your uncle go bankrupt? One of tha main points of having a limited company rather than being self employed is that there is limited personal liability.

After speaking to my aunt today it sounds something odd is happening as she has cashier receipts for her paying buildings insurance in quarterly instalments for the years 2002,2003 and 2005 (these I have found in the mass of papers) but these payments are not reflected in the statements and they have taken one big lump sum for buildings insurance from the interest repayment account.

Cashiers receipts would indicate manual payments. Typically by cash or by cheque. If paid by cash then they would not appear on any statement.

It was very common in that period to have the house insurance taken from the mortgage and the money for it collected with the mortgage payment.

I thought maybe Britannia did not know about the Endowment but I came across Britannia Life who were once a part for Britannia group which made me think perhaps the policy did originate with them (if it does exist). Or are they two completely different companies?

Whilst they share logo, they would not share data. A life company and a bank or building society are two different entities.

Another thing was that they guy in the bank said yes there is an endowment and has been paid (unless I totally misunderstood) and said due to my uncle being bankrupt it was possible that it has gone to a debtor and suggested doing a credit check on my uncle but I thought they were cleared 6 years after the bankruptcy case is settled?

It wouldnt have had a value back in 1987 as it was just a year old. However, if your uncle did decide to use the money in 1993 (where it would have value but only a small amount) then ideally he would have set up another. All this could have been done (or not done as it possibly is) without the knowledge of the building society.

I really doubt it would have been assigned to someone else as they take over the premiums. It would not have been logical for that.

Britannia life could do a policy search (would need your aunts signature) where the addresses, dates of birth and full names are supplied. IFAs do it all the time. That would at least rule them out or possibly find a policy. The letter would need to state that your aunt is looking at an endowment policy from around 1986 and that it is probably no longer in force and would like to know what happened to it.

silvercar

In 1986 Britannia would have insisted on a endowment policy and it would have been lodged with the mortgage. I would suspect on bankruptcy in 1987, the Official Receiver would not have been interested in an endowment policy worth so little and even a stickler for every rule would have allowed MRS to buy the interest back for a nominal amount. In those days non payment of the endowment policy would have been notified to the lender and the lender written to the mortgage holder for explanation and required another policy to be started.

Moving forward the death of a joint owner of an endowment policy would have triggered payment of the life insurance element - this would have been the amount in full. It is possible that the endowment was paid out at the death of MR. The question is where the payment went. It could have gone to the Brittania and be sitting in a holding account unassigned. That would at least explain why no payment is currently being made. That would be very very good news as it means all the mortgage payments since death of MR should be refunded.

Having a similar size policy started in 1986, I can say that you are looking for a monthly payment of roughly £50.

You can download the property deeds from the land registry site for £4 (though not on a sunday!). That should tell you what charge is on the property.

opinions4u

In 1986 Britannia Life were not part of Britannia Building Society.

So while it is possible that the building society sold a Britannia Life policy at that time, the odds are very much against it.

Let's be honest.

The most likely outcome is that the policy premiums stopped at some point prior to the bankruptcy and the policy lapsed with no value.

silvercar

The most likely outcome is that the policy premiums stopped at some point prior to the bankruptcy and the policy lapsed with no value.

Who really knows?

This may not be true because the bankruptcy was soon after the mortgage was taken out and at that time lenders were insisting on taking charge of the policy and would have been informed if the policy was cancelled.

New mortgage in 1986 and bankruptcy in 1987? A whole lot going on that we don't know about.

Question. On the death of MR did the lender ask for a copy of the death certificate? Was the lender made aware of the death MR? Both would point to the lender having some charge over a life assurance policy.

silvercar

Track down the payments through bank statements and then ask the bank where the payments were going.