Why are some endowments so much worse than others?

mayb_2

I don't think I am the one making sweeping statements and using all and 100% in my posts dunstonh (I do think I mentioned an 80%. (Although I admit the last one was a bit sweeping regarding the last minute selling of endowments - however, I do believe it - but it obviously wasn't 100% and I didn't claim it was)

I think we could agree that not all Financial advisors are bad but I don't think you will find many people posting on a site about the misselling of endowment mortgages etc that are happy with their lot! It is likely that a fair few of them feel one way or another that their product was missold to them is it not? What do you think 98%?

Once again though you are missing the point I am trying to make - the problem was not that all of the advisors sold products and made claims for them that were deliberately missleading (at least not in the early days)
The problem arose when they failed to advise the consumers about what was happening at an early stage and then this is compounded when companies resist having to make a redress.

In my own case a company agent persuaded me that a with profits policy would perform far better than the pension that I had decided to give up He actually sold me a product that relied on exactly the same fund to make its money. If he had encouraged me to increase my pension I would perhaps have had a little more protection within that vehicle and he would have to give me information every year as to its actual performance and projections for my pension. I know what I would call that dodgy deal and I also know that similar things have happened elsewhere. See the last post from Crazy Saver
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!

I never actually said anyone sold these things with malice - not even in my own case - but I do think they were sold with greed as motivator and if they hadn't failed we would have been none the wiser would we? with everyone happy all round?! But that is cloud cookoo land again isn't it.

ps Crazy Saver in my case someone posted to say this practice is called churning perhaps he can tell us whether that is legal.

I don't actually think that the blame game is very useful - we should be looking rather at how these things are being addressed and that is not impressive, and as Crazy Saver has asked - how to know who we can trust to give us good advice. So far that question has not been answered as we all know there are badies out there and no doubt goodies too. Thrice bitten and 100% shy in my case. Woops I did use that word this time I just couldn't help it.

mayb_2

http://forums.moneysavingexpert.com/showthread.html?p=3549572#post3549572

Above is the link to the page where I suggested people post the names of companies they felt had dealt fairly with their claims for missold endowments. I don't know how to post a real list that people could add to. So far no one has posted anything at all on that. I must try to dig out the name of the company we dealt with - although they had changed their name since the time we were sold the mortgage and I think they were linked with the Estate agents who had sold us the policy originally.

I don't think you will ever get a direct answer to your original question. I can't see any way that we are going to know where is a safe place to invest. The post office are offering some good deals on ISAs according to Martin and I have gone for one of them - they have some fairly safe if not exiting products.

I totally sympathise with your situation which sounds even worse than ours. A stiff whiskey and a lot of herbal sleep inducing pills are the answer for me at the moment - together with sitting up half the night posting on here in the hope of finding a miracle cure.


In case it helps this is what we are doing now:
We will probably have to sell our house to get a pension. I am going to be working full time for ever. We have fixed our mortgage for 10 years at under 4.98% (repayment only) which will take us up to retirement. We are now looking for ISAs etc that pay over 5% to save for the capital. We can pay up to a couple of thousand a year (it may be a % off the capital each year) without a penalty so we aim to do that too. We have had to add a small amount to the mortgage to cover replacing the central heating and some of our windows but we are hoping that this will help with the effort to cut running costs. All real savings on this will go towards paying off the mortgage. The other debts we had we put on a fixed for the life of the loan card at 3-6% I think.

I have no doubt the FA's will throw up their hands in horror at these arrangement but at least we are in total control of this and can see an end game. We are also determined to have good holidays and so have a savings fund for that too. We buy everything using the Tesco credit card and pay off in full each month. We are collecting the vouchers and will get 4 times their value for a holiday through Virgin holidays.

One interesting thing that we did look into was lifetime mortgages. We asked our sons how they felt about inheriting our mortgage and they were quite happy with the idea. It is fairly new out there and we were not keen on diving into this at an early stage but may look at it again in 10 years time if we don't want to move. I do like the idea of not having to sell the house for nursing care etcwhich may have a get out clause with the lifetime mortgage - that one has still to develop.

SAGA have an interesting deal for oldies too. They will give you money on your house (not as bad as some equity release deals) and they give your inheritors a year after you die to sell up and repay. This may have changed since we last looked at it but it is something we may look into again. I do resent the idea of being forced to move.

Small steps we think but all in the right direction. All of this advice (apart from the SAGA thing) has been taken from Martin's web site so some of it must make good sense.

Lots of tips on the wannabee mortgage free thread as well.

EdInvestor

Here you go again mayb

mayb wrote:

In my own case a company agent persuaded me that a with profits policy would perform far better than the pension that I had decided to give up He actually sold me a product that relied on exactly the same fund to make its money. If he had encouraged me to increase my pension I would perhaps have had a little more protection within that vehicle...

And yet earlier you said you had cancelled the pension because it was too expensive. [I think you also may have mentioned that you ended up paying even more into the endowment than into the pension, even though the cost had been the reason for cancelling the pension in the first place.:huh::huh: ]

To be honest I do think it must have been very difficult for the FOS to see a clear case of right and wrong on this complaint.

crazysaver wrote:

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!

This is definitely churning.

As DOTW said some time back on Mayb's complaint, it does seem possible that a churning complaint on hers might have been worthwhile as well.But this would really have needed professional help as it is not 100% clear-cut, as not involving the same product.

Apart from any other inconsistencies.....:(

Crazy_Saver

Hi mayb and EdInvestor

I only mentioned the churning details briefly in previous posts as after taking tons of wonderful advice from.... dunston, EdInvestor, Vinno65, matto and DOTW to name but a few, my case has been forwarded to the FOS and the churning part has been covered.

Crazy_Saver

Originally posted by mayb
I totally sympathise with your situation which sounds even worse than ours. A stiff whiskey and a lot of herbal sleep inducing pills are the answer for me at the moment - together with sitting up half the night posting on here in the hope of finding a miracle cure.

My tipple is G&T :beer: Drunk quite liberally whilst spending hours and hours in the evening on this forum just like you;)

Crazy_Saver

Originally posted by mayb
In case it helps this is what we are doing now:
We will probably have to sell our house to get a pension. I am going to be working full time for ever. We have fixed our mortgage for 10 years at under 4.98% (repayment only) which will take us up to retirement. We are now looking for ISAs etc that pay over 5% to save for the capital. We can pay up to a couple of thousand a year (it may be a % off the capital each year) without a penalty so we aim to do that too. We have had to add a small amount to the mortgage to cover replacing the central heating and some of our windows but we are hoping that this will help with the effort to cut running costs. All real savings on this will go towards paying off the mortgage. The other debts we had we put on a fixed for the life of the loan card at 3-6% I think.

Hi mayb.

While we are waiting to hear from the FOS, we have re-arranged our finances to try and cover the shortfall. This also included an extra £20k on the loan as we had some building work done on the house as it was cheaper than moving to a bigger one(kids have a tendancy to grow)..................We have changed to part repayment and part endowment and extended the mortgage term for another 10 years to keep the costs down (my children are still at school so I am only working P/T). Our plan was to wait until the endowment finishes(10 years time) and then pay off as much of the mortgage as possible, then reduce the term as much as possible as the payments will be lower and I should be back to working F/T. I did say to my current FA that extending the term by 10 years would take us virtually up to retirement but she answered that with "don't worry, by that time the national retirement age will be 75 anyway". This was said in jest, but I don't think she is far wrong!

We have reconsidered keeping the endowment and once a decision has been reached by the FOS we will probably surrender it and go over to all repayment. Thought about selling it but nobody seems to want it:mad:

When I have got my head fully round all this, we shall open up a couple of ISAs as an emergency/savings fund.

mayb_2

EdInvestor wrote:

Here you go again mayb

And yet earlier you said you had cancelled the pension because it was too expensive. [I think you also may have mentioned that you ended up paying even more into the endowment than into the pension, even though the cost had been the reason for cancelling the pension in the first place.:huh::huh: ]

To be honest I do think it must have been very difficult for the FOS to see a clear case of right and wrong on this complaint.


This is definitely churning.

As DOTW said some time back on Mayb's complaint, it does seem possible that a churning complaint on hers might have been worthwhile as well.But this would really have needed professional help as it is not 100% clear-cut, as not involving the same product.

Apart from any other inconsistencies.....:(

What on earth is that all about?

Yes EdInvestor I did cancel my pension as I couldn't afford it and it didn't look promising - you may remember if you should chose to do so that I also said:

[I]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). [/I]

It was also you I believe that told me that this was 'churning'. Although an FA looking at this after our complaint had been made said that the new policy was incorporating the same elements as the pension, we did not know the word churning. I mentioned this to Crazy Saver as I thought it may help her and I wanted to know if anyone knew if this was legal. Question not answered.

If anyone out there is interested in what this is about perhaps you would like to read the posts for yourselves. (Hopefully not edited) These can be found on the thread entitled 'Endowment misselling not attached to a mortgage' and I have pasted the link below.

I think all of this is a distraction and the more important issues are being sidestepped in the pursuit of finding me confused.

I am beginning to think you must be that Ombudsman EdInvestor you are so determined to absolve him.

If he is out there and not sleeping at night - just start treating these missold with profits policies in the same way as the mortgage endowment misselling and stop using that blind eye, and we can all get some rest.

I think I am ready for that whisky now Crazy Saver.


http://forums.moneysavingexpert.com/showthread.html?t=299974

mayb_2

Thanks for your story Crazy Saver it is interesting to see how people are getting out of their own situation. Perhaps we should start another thread on life after misselling? Or the best way to drown your sorrows! Perhaps 'life' isn't quite the word I am looking for. I will work on it.

I would be interested to hear how the churning angle works out though. I haven't given up on getting some justice one day or at least of exposing the injustices and those responsible for them.

EdInvestor

mayb wrote:

It was also you I believe that told me that this was 'churning'.

No, it was Defender of the Weak.See post 16 in the original thread.

mayb_2

Thanks for that EdInvestor.

It may also be worth mentioning here that the pension and the with profits policy were both invested in the same CIS long term business fund (not open for new business therefore now closed).

So all that really changed when we cancelled one and took out the other was ......?
I think it was the commission paid to the Agent - much higher for the savings plan.