Is compensation offer an easy cop out

risky_business_2

My complaint that a £30,000 endowment policy was 'unsuitable for me' has been upheld by the society that sold it.
The society arranged for the calculation of possible compensation by an independant company.
A compensation figure of £4192 has been reached and is based on the date that 'I initially accepted the society's offer, to put me in the same position I would have been in had I taken out a repayment mortgage'
I have to respond to this 'offer' by 16 November and the payment option form concludes in bold with 'Any further shortfall occurring after accepting the societys offer of compensation will be your responsiility'
I continue to pay this endowment with seven years to go.
This offer rightly catches up to the current shortfall, based on current surrender value, because I did not take out a repayment. I feel however that I remain with a problem as I will continue to pay interest for another seven years and suspect the surrender value of my policy will change little from now till then leaving me with a considerable shortfall despite investing the compensation of £4192 in the mortgage.
Should the Society be pushed to project a suitable figure based on the policy completion or at least give a future gaurantee.
Is this compensation an easy cop out and a cheap smokescreen. Am I too sceptical........
Your thoughts would be much appreciated.
yours aye
Risky

dunstonh

Is this compensation an easy cop out and a cheap smokescreen. Am I too sceptical........

First of all, it isnt compensation. It is financial redress.

They are paying to put you back in the position you would be if you had proceeded with a repayment mortgage. So, from this point on, if you choose to remain on endowment basis, it is your responsibility and not theirs. If you switch to repayment basis, you wont have to worry about it not meeting target. Equally, if yours is one of the better endowments, you could end up in surplus and keep your redress.

risky_business_2

Thankx for your view.
Is it the case that I have another dilema of choice from now then.
Sell the endowment and change to repayment or maintain the endowment (Standard LIfe) andhope for improved return.
I have recently reviewed my mortgage and am tied for the next two years anyway so I have time to think.
In the short term is this offer of compensation likely to be 'as good as it gets'
Appreciate your thoughts.
yours aye
Risky

dunstonh

In the short term is this offer of compensation likely to be 'as good as it gets'

On conventional with profits plans, the value tends to change once or twice a year on bonus announcement. On unitised with profits or unit linked plans there is a daily value. If the surrender value of the policy increases, the redress generally drops. There are people out there who have refused first offer, had recalculations done and then been offered less the second time as the markets have improved and increased the surrender value.

Unless the figures input into the calculation are incorrect then there is no point holding out for more.

EdInvestor

Post some figs so we can see if you should surrender the endowment as well

Guaranteed dum assured
Declared bonuses
Surrender value
Monthly premium
Maturity date
Maturity projections

Mortgage interest rate

risky_business_2

Will do it this evening thankx. Painting rooms at the mo
Yours aye
Risky

risky_business_2

Noted and thanks
yours aye
Risky

risky_business_2

Target amount £30,000
Guaranteed sum assured £16,973.98
Declared bonus £7,223.98
Surrender value (Feb statement) £12,240.85
Monthly premium £39.10
Maturity date 28 December 2012
Maturity projections 3.75% £18,000 (-£12,000)
5.50% £20,100 (-£9,900)
7.25% £22,300 (-£7,700)

Also have three smaller endowments which show total shortfalls of
4% £6,600
6% £3,680
8% (-£2,340)(gain)

yours aye
Risky