Why are some endowments so much worse than others?

Paul_Herring

Ian_W wrote:

EDIT: Ignore this comment Ed has now removed 3/4 of the post I found so confusing

What's that all about then?

I wish there was a way of seeing previous versions of posts....

EdInvestor

By the way are you suggesting that there have been successful claims for missold with profits policies, savings plans in the past (we are not talking about mortgage endowments here in case you are confused).

Sure: they were from people who made a loss. They were based on the policies being unsuitable, normally because they were not matched to the investor's attitude to risk.

The lesson to others making misselling claims from mayb's case IMHO is to say as little as possible in your complaint.. Don't try to remember what happened, don't try to reconstruct the sale.

The strong likelihood is that you will inadvertently say things which can be used to cast doubt on your story - I've shown how this could be done above.[I am not trying to discredit mayb, just trying to explain what can happen.]The providers will make every effort to do this, as usually they have destroyed their files and have no evidence to back up their claim that the sale was compliant.

#Sorry for the confusion about my earlier post, it was just a cut and paste error.

Crazy_Saver

Originally posted by mayb
Trying to put the blame on the consumer for their own predicament just isn't on.

I sugested on one thread that people post the names of those companies whom they felt had dealt fairly with them over misselling and so far there is no one on that list.

Can you post a link to this thread, I wouldn't mind having a look!

Bitter, cynical and probably angry, dissapointed and cheated too - yes I am probably all of those things and more. I wonder how that happend? Anyone else out there feel the same way?

Yep! But this is no reflection on the advice and help received on this forum.

I know life isn't fair, but I am envious of the people who invested/saved with Fairpak-not 100% sure of the name but I'm sure you all know who I mean. People everywhere are rallying round to try and help them recoup the money they have lost which I do not deny them one bit. Yes I know I might be compensated but it won't cover the £31k shortfall for our mortgage that myself and my husband really have lost a lot of sleep over and it definately won't pay me the 40-60K that we really, abeit naively, thought we were going to have as a lump sum in 2016.

I do understand that the compensation system is there to put me in the position I should be at with a repayment mortgage, and I know I may have been saving about £10pcm by going down the endowment route for the last 15 years but all I can see is a big hole in my finances that we really cannot and probably never will be able to fill:(

Rightly or wrongly, I feel that we are anything up to £91,000 out of pocket (£31k shortfall and up to £60k surplus which could have been our pension fund).

This really upsets me as that is a life changing sum of money that a FA convinced us we would have if we did as she said. Yes we were only in our 20s then and we were more interested in going out, spending time with friends, all the usual things that most young people do. We weren't bad people, just more interested in living than spending all our free time worrying about our long term investments which is why we put our trust in our FA.
I'm sure that young people today are the same and always will be. Of course had we been the age we are now, we would have realised the importance of sorting out our future finances.

Sorry for going on, but I'm sure most of you understand. I really have never knowingly cheated anyone (apart from noticing something in my trolley once that I forgot to put through the checkout at Asda;) )and find it hard to accept that people can do it to me!

Ranting Over,

Crazy Saver :mad:

dunstonh

I really have never knowingly cheated anyone (apart from noticing something in my trolley once that I forgot to put through the checkout at Asda;) )and find it hard to accept that people can do it to me!

No-one has done it to you either. Endowments had never failed. No-one envisioned the changes happening which caused them to fail. Do you honestly think that over 100 insurance companies which have now closed for business, because they can no longer afford to transact, did that on purpose? The person that sold it to you didnt think they were cheating you. They would have considered it a totally valid option with the potential as you were told. If it was considered such a bad thing why did consumer groups still recommend endowments up to the point it was realised that they were becoming obsolete?

A lot of people made mistakes but not on purpose.

At least you have the consolation that you are financially better off now than you would have been had the circumstances remained in place that would have allowed that endowment to pay a surplus.

The endowment mentality is very much the same as the mortgage buy to let craze you have now. In fact, a mortgaged buy to let is higher risk than an endowment mortgage. Yet you see people taking that risk for the greed. Many ignore the risk on the basis that "it always makes money" which is similar to the "always paid a surplus" that went with endowments.

Consumers can be lemmings at times even when the information is put in front of them, they can still ignore it because all they can see is the pound signs.

Crazy_Saver

Originally posted by dunstonh
Consumers can be lemmings at times even when the information is put in front of them, they can still ignore it because all they can see is the pound signs.

We are not all governed by greed dunston!
My husband and I just wanted someone to help us arrange our mortgage for us as we were not wordly wise enough back then to do it ourselves. I can honestly say (embarassingly so) that neither of us really knew the difference between an endowment or repayment or pension style mortgage until a few years after we had taken out the endowment. We didn't approach the advisor and ask for anything in particular just help! She really was the one who talked us into taking out the endowment. She also told us to surrender the endowment that we had already been paying into and then sold us another one!

And before we go any further, although we already had an endowment, we didn't fully understand the risks attatched it was just something that the estate agent arranged for us when we bought our first home 4 years earlier.

At least you have the consolation that you are financially better off now than you would have been had the circumstances remained in place that would have allowed that endowment to pay a surplus.

How are we better off

dunstonh

We are not all governed by greed dunston!

Of course not. Just as the majority of advisers are not bad.

How are we better off

Low inflation means that your income is able to buy more in real terms, mortgage payments have dropped significantly lowering your monthly cost and your house value has sky rocketed. If the economy had continued, you would have had none of that and that £31,000 you thought you would have got would be worth around £7000 in real terms at the end.

Crazy_Saver

Originally posted by dunstonh
Low inflation means that your income is able to buy more in real terms, mortgage payments have dropped significantly lowering your monthly cost and your house value has sky rocketed. If the economy had continued, you would have had none of that and that £31,000 you thought you would have got would be worth around £7000 in real terms at the end.

Thanks dunston..................it looks right on paper, but somehow I don't feel so rich.

mayb_2

EdInvestor please don't keep trying to judge my case with the Ombudsman all over again, as you have not seen any of the papers and you do not have all of the facts - you don't know the half of it and I do know I was missold. Those people you say won their cases - how did they prove they had made a loss without a written guarantee of return? I must have missed something there.

Those of us who had policies like this all agree on the large amounts of money we were promised. Dunstonh has said they werent missold at the time because these policies always made money.

I, and I think many others are in the same boat, didn't know why or how they made money and were not advised when they ceased to be a good investment. We went to advisors to be advised (or they found us)- you yourself dunstonh have said it is not good when people try to do this for themselves. Yet having taken that advice they became lemmings apparently.

Why is it that the people who took out these savings plans are lemmings and greedy dusntonh - whereas the people who sold them (and received large commission payments) were neither greedy or confidence tricksters. There was a period of time when these sales people knew that the boat was sinking - so sold as many as they could before the word got out. The longer they left the consumer in the dark the longer they could keep collecting on the policies they had sold. The figures are somewhere on the FSA site but at one point over 80% of mortgages sold were endowments and many were in the later years.

A Broadcaster died today, as I expect you have all heard and someone said of him that he tried to bring light rather than heat to issues when interviewing politicians etc. Perhaps we should bear that in mind. Most people here are trying to find out what happened to their money and how best to rectify their finances and face the future. We are trying to shine some light into some very dark and murky corners. I have learned a lot from this site and it has informed my decision making. Calling consumers lemmings and greedy and such like is not in the spirit of this site at all. So lets just not go there.

I like Crazy Saver know when I am poor! I also spent a lot of money saving for my future and went without to do that; now that the future is arriving, I am realising that instead I could have had nice holidays and fast cars and been no worse off financially.

mayb_2

Quote from dunstonh
Low inflation means that your income is able to buy more in real terms, mortgage payments have dropped significantly lowering your monthly cost and your house value has sky rocketed. If the economy had continued, you would have had none of that and that £31,000 you thought you would have got would be worth around £7000 in real terms at the end.

If the endowment you had was attached to a mortgage and it reached its target you would have paid off the mortgage regardless of inflation and the economy etc. Although you would have been paying more interest on your mortgage and maybe had less capital in hand at that time, you would not have been left with a shortfall. As these appear later in life and there are also problems with pensions and savings etcon the same basis, personally I would have been happier with a surplus worth 7000 in real terms than a 25000 shortfall and no pension.

I do remember that some people in the middle of this could not pay their mortgages and handed their keys back and others had mortgages that were higher than their house values. What happened to them I wonder. This 'you never had it so good theory' does not ring true for me - and it doesn't work as 'it could have been worse' either.

dunstonh

Those of us who had policies like this all agree on the large amounts of money we were promised. Dunstonh has said they werent missold at the time because these policies always made money.

That isnt quite what I said. I said that they werent sold with malice and the assumption was that they would always make a surplus because they always had.

We went to advisors to be advised (or they found us)- you yourself dunstonh have said it is not good when people try to do this for themselves. Yet having taken that advice they became lemmings apparently.

I dont know why but you appear to be taking snippets of information from the posts and turning "some" into "all".

Why is it that the people who took out these savings plans are lemmings and greedy dusntonh - whereas the people who sold them (and received large commission payments) were neither greedy or confidence tricksters.

Why do you want it so black and white? You had some commission greedy advisers selling them, you had no commission advisers selling them. You had the consumers association and the media recommending them. They were generally seen as a good thing. You used to get people come to you asking for them. You seem to want to assume that all consumers were mis-sold and that all advisers were greedy and mis-sold on purpose. It wasnt like that at all.

The figures are somewhere on the FSA site but at one point over 80% of mortgages sold were endowments and many were in the later years.

Might have had a lot to do with endowment mortgages being cheaper than repayment mortgages a lot of the time. When interest rates were high in the 90s, the difference could be £30-40 per month. For those pushing the budget, it was a way to get a mortgage and pay less.

A Broadcaster died today, as I expect you have all heard and someone said of him that he tried to bring light rather than heat to issues when interviewing politicians etc. Perhaps we should bear that in mind. Most people here are trying to find out what happened to their money and how best to rectify their finances and face the future. We are trying to shine some light into some very dark and murky corners. I have learned a lot from this site and it has informed my decision making.

Perhaps you should take his example and read what is being said rather than trying to make out that advisers are bad and consumer is good 100% of the time.

Calling consumers lemmings and greedy and such like is not in the spirit of this site at all. So lets just not go there.

Many were greedy and many are lemmings. Just as they are today going in blind with buy to lets wanting some of that "guaranteed to make money" property investment.