Endowment Misselling not attached to a mortgage

mayb_2

I am not sure whether this is stated on the old pension document - it was a Personal Pension - so I have only told you what the IFO said at the time.

We were not told that either of these products involved investment in the stock market. We would not have purchased either if we had known there was any risk to the return. We thought we were saving not investing. It may sound naieve now but the dictionary makes a clear distinction between these two words and so did we.

If the word Endowment had appeared on any of the documents we had, we would obviously started to look at this sooner because now everyone knows the implications of Endowments. We hadn't been told and we didn't make the connection - that is why the name of the policy does make a difference dunstonh, a Savings Plan with added life assurance does not sound like an Endowment or investment to us.

The PPFM originally published and now withdrawn by the CIS, states that both its Endowment Assurances (this is what they say we had), Free Standing Voluntary Contributions, Industrial Life Endowment and Whole Life Assurance, Low Cost Endowment Assurance (Mortgage Endowment), Option 32, Pensions Annuity (Table P), Pensions Extra (traditional with profits (AVCs), Personal Pensions (this is what I had) and SERPS were all listed under the CIS Long Term Business Fund and also shown as "these products invest (or provide the option to invest) customers' premiums in the relevant CIS fund" and also "These products are no longer open for new business.


In answer to the points raised by dunstonh we never claimed that we were advised to cancel my pension by the CIS Agents. I took that decision myself as I felt I could not afford the premiums and a projection I received looked pretty poor to me.

We also did not state a 'need' to anyone to save or invest - we had no savings or investments - as shown on the Fact Find, just a very large mortgage. The Agents visited us without invitation to do so - we had expressed no desire to talk to them about our finances. I may sound as if I know what I am talking about now (or perhps not) but we were both clueless then - this is knowledge gained from bad experience and necessity.

The Agent however took the line that I should be saving for a pension and persuaded us that this policy was a much better way of covering that - the 15 year term was designed to pay out at the same time that my husband was planning to retire. We could buy a pension when it matured - or if I no longer had a need for a pension we could use the money in any way we wanted. It was a large sum of money to us and we felt we would be stupid not to take up this plan even though we knew we could ill afford it at the time (and in difficult times struggled to carry on paying it so as not to lose the reward for not cancelling it).

The CIS built up a relationship of trust and confidence through its visiting Agents and built up business this way. These people knew your name and your business, they shared a cup of tea and a chat - they came into your home on a regular basis to collect your premiums. Why would we not trust them? The CIS should take responsibility for the actions of their Agents and for the lack of information given to us at the time and since.

Our IFS told us that the Agent would have lost the commission he had been paid for selling me the pension as I had kept it for so short a time , and that by replacing my pension with this policy he would have recovered this loss and made more on top. The IFS was also honest enough say that if our claim succeeded people such as themselves would be in serious trouble and may even go out of business! I repeat that the IFS was not paid for any of this advice.

mayb_2

I have just caught up with your last post EdInvestor and hope I have answered it above. However, perhaps I should say that we were actually persuaded to pay twice as much in premiums for the Savings Plan as for my pension. Quite a salesman really considering why I had cancelled it. No information supplied about tax relief and I don't think I was advised at the time to contract back into SERPS. The CIS did do this later - through the post I think.

One of the two Agents who visited was not a regular - but he dealt with the pensions side of the business and had sold me the original pension - so I don't think the CIS should really be able to claim a lack of connection between cancelling my pension and selling us this policy do you?

defender_of_the_weak

Dunston

The number of complaints upheld is not purely down to cherry picking the winnable cases, the majority (over 85%) of rejections are forwarded for an Ombudsman decision of the balance of those dropped after the initial rejection, these are down to time bars that will not be overturned where we are not aware of the position from the initial submission.

If you factor these in to the FOS figures their uphold rate would increase to 41-42%, still well below our findings and experience.

mayb_2

Found this today (http://www.fsa.gov.uk/Pages/Library/Communication/Speeches/2001/sp73.shtml
and thought it interesting (of course I may be alone in that). It is taken from a rather long speech made by Howard Davies, Chairman of the Financial Services at the time, to the Institute of Welsh Affairs in February 2001. The title of the speach is "The Future Regulation of With-Profits Business.

For the last 50 years with-profits policies have taken a large share of the long-term savings market in the UK.............

......These are not the only problems with the with-profits product. There are presentational problems, too. The funds are opaque, with investors getting little information about how their funds are invested, or indeed about the nature of the risks (whether risk of early surrender, investment risk, or risk by association as in the Equitable case) to which they are exposed. The annual statements an investor typically receives are often less than helpful in this regard. Even the terminology used seems designed to mislead. So while most funds allocate guaranteed sums to policies along the way, these allocations are described as "bonuses". Not a usage of the term for which one would find support in most dictionaries. While the so-called terminal bonus remains determinedly unpromised and unclear, usually until the last possible moment. (There are some good reasons for this coyness, in terms of the reserving which is required when a bonus has been firmly promised, but it does not make for clarity for the investor.)

This lack of transparency has more than an irritant effect. It is one of the most important reasons why mis-selling has been so easy. It has been possible for salespeople to present these policies to investors in elaborate and confusing ways, causing many people to take out contracts whose characteristics were unclear and unsuitable to the investors' needs[/I].

The underlining is mine.

Maybe I am not imagining the possibility that these products could be missold after all? This was in 2001 - plenty of time for the Ombudsman to catch up then.

dunstonh

Most conventional with profits plans ceased to be available during the 90s and were replaced with unitised with profits, some of which are still available today for new business and can be suitable in a number of scenarios.

You can look at these things too retrospectively and measure past events by today's standards. One could argue that the speech made in 2001 was like shutting the stable door after the horse had bolted.

However, none of this is going to help you in your complaint. In 1994, the sale of with profits endowment savings plans were valid. We didnt have ISAs. We didnt have lower charged products available then and whilst PEPs were available, they hadnt been long available as regular contribution and most tied providers didnt offer them at that time and therefore didnt have to recommend one.

One of the two Agents who visited was not a regular - but he dealt with the pensions side of the business and had sold me the original pension - so I don't think the CIS should really be able to claim a lack of connection between cancelling my pension and selling us this policy do you?

It was normal for the home service companies to operate two levels of rep. One would deal with collections and low level business such as household/car and industrial branch. The other would deal with ordinary branch, such as pensions and larger endowments. Two visiting was fairly common when they wanted to sell you something.

mayb_2

Dunstonh we do not know if our policy was conventional or unit linked - to this day the CIS have failed to provide us with information as to what we purchased. We asked for a copy of the document we signed at the point of sale but have never been given this. The Ombudsman passed on the paperwork supplied to him by the CIS so we know he didn't get this information either. We didn't ask for advice from the CIS or express an interest in purchasing anything from them - we made no appointment to see them. The Agent could have advised me against cancelling the pension and recommended upping the level of contributions couldn't he? He sold me something that would benefit him.

We do not have any grounds for complaint according to the CIS and the Ombudsman. The Ombudsman has already stated that in his opinion we would not have purchased anything without getting all of the information about it and does not believe business was done in this way. It is dfficlut to understand how anything ever gets put before the Ombudsman at all if this was the case. I would say that he was at odds with the opinion of the FSA Chairman as stated in his speech and with the FSA as stated in their many documents on with profits business.

We would not have purchased this savings plan if we had known there was a risk.

By the way did you read all of the speech?

The point I am trying to make is that it would not have mattered what we said, what evidence we supplied, what the stance of the FSA is on this matter or anything else - we could not be allowed to win our claim of misselling of this policy as it would open up a real can of worms for the industry. This is not right - it means that a lot of people like myself have lost out, through no fault of their own, on savings and pensions.

We received no updates - so how were we expected to know what was happening. No lap tops or mobile phones or printed glossy brochures involved here just two Agents scribbling on bits of paper.

The remit of the Ombudsman is fairly limited and it could be that he is not in a position to consider all of the issues here. If that is the case there is no place for redress on these claims other than the courts. This gives no right of redress to all of the people who cannot take this step because of the costs involved the amounts are too large for the small claims court. The FSA does not act for individuals - if it has enough complaints it may take action against a company concerned.

The CIS was in clear breach of FSA guidelines in that it failed to keep us informed on the performance of our plan. It also failed to advise of the closure of the fund. This may mean that the FSA has acted to address this. However, we may never be given information about that and it does not help us in any way although it may help others.

That is the discussion I would like to pursue here - are we really in such a minority that our voice just will not be heard.

By the way - did you notice that the Chairman referred to these as part of the long term savings market? What is in a word?

We may or may not get redress one day. What I am trying to say is we are not looking for new angles on our claim, rather to open up a debate on the issues involved regarding the misselling of endowments (with profit policies) not attached to a mortgage.

EdInvestor

What is the current status of this endowment policy?

Can you post any of the following information about it?

Guaranteed sum assured
Declared bonuses
Surrender value
Monthly premoum
Maturity date
Maturity projections

Normally some of this info will be available over the phone at most companies.

mayb_2

I can give you all of that information EdInvestor - do remember thought that most of this was only made available to us after we made our complaint.

Current status - cashed in
Guaranteed sum assured - 8000 (sorry American keyboard does not have a pound sign - and no I am not American)
last declared bonus on this policy (as we now know) was 41.46 in 2004 giving a total in 10 years of 1924.32. Recent documents published by the CIS suggested that future terminal bounuses may well be set at nil.
Surrender Value - given in 2004 as 5447.40
Monthly premium - 51.82
Maturity date - was 15.11.09
Maturity value - projected in 2004 as 10,600 at 4% and I don't think this is being achieved at the moment.

Just in case someone is going to tell me that 30,000 was an unrealistic expectation of a return on this policy, I will quote from one of the Ombudsman's letters to us.
" A return of closer to 30,000 was arguably achievable at the time of sale: however this depended on the level of bonuses added. The figure of 8,000 was simply the basic sum assured, it was not the maturity value that would have been anticipated and therefore Mr and Mrs *******'s future requirements would not have been based on the expectations of this sum."

Quote from CIS in a letter to the Ombudsman "The customer wished to cease pension contributions for their own reasons but wished to continue to save (for lump sum at retirement)". Funny that the Ombudsman still could not see a connection between my cancelling my pension and taking out this savings plan.

Quote from the CIS in a letter to us in 1994
" I appreciate that the non delivery of your bonus certificates has left you somewhat in the dark as to the performance of you investment and I apologise for this lack of service."

Sorry Ed investor I am trying, but I just can't keep it simple can I!

Pobby

Have to admit that some of these policy sales people ``embroidered``the truth a little.When we took out our endowment im 1988 we were told that the target amount,£60k would more than likely be enhanced to about£120k.Never was it pointed out that it could fail to achieve this,that the nonies were invested in the stock market or indeed our attitude to risk.

We still have the policy in place as a savings vehicle and hope that the terminal bonus may be OK.The mortgage is now pretty well paid up.

mayb_2

If this policy is with the CIS Long term business fund then you could not assume you would get a terminal bonus at all. Have your Company provided you with annual statements and projections? if not they should have done so and if they have closed the fund you should have been told that too.

If your policy was originally sold as the vehicle to pay your mortgage, you should be able to prove your minimum expectations were for the amount of the mortgage I would have thought.

Our IFA thought it would be wrong to continue paying into the CIS policy because (using the projection figures they provided) they were paying far less to us than another fund might using the same projections and starting with the funds value at the time the IFA looked at it. (Something to do with charges on the policy I think) We would have got less back than the money we paid them in premiums I think was the reasoning for the advice.

You might do well to get some advice - it could be your money could earn more eslewhere. You can also make these policies paid up after a certain length of time. They are sort of frozen but you pay no more into them I think. Someone should be able to look at it for you and tell you what you should do now.