Why are some endowments so much worse than others?

dunstonh

If I had told the FO that the CIS had talked me into cancelling the pension and taking out this policy I could have had a stronger case than I had by telling the truth. Is this what you are saying?

Yes. And as they didnt have the documentation to say otherwise, it would have been upheld.

But, if I wanted to save towards a pension, why does everyone ignore the fact that I would have been better off staying in the pension and doubling my premiums. Or are you saying that would not have been the case?

What did you want? Pension provides income, the endowment provides lump sum. What was your need documented as? If it was to provide capital lump sum on maturity, then a pension isnt suitable.

This included the fact that our attitude to risk was not completed on the Fact Find

Was it documented elsewhere?

that we had not signed the Fact Find,

Doesnt need to be. Some companies do, some dont but it has not a requirement.

I am sorry dunstonh but I would insist that we were not treated fairly by the Ombudsman and as I do have all of the paperwork here and can't send it I hope you will take my word for it.

I cannot recall from the thread but did you appeal the decision?

mayb_2

I would not have been happy lying to anyone about what happened dunstonh and I really feel I shoul not have had to in the light of the evidence. Both the fact find and a statement by the CIS confirmed that I was saving for a lump sum at retirement (the Agent had said to me that I would get a lump sum which I could use to buy a pension) The evidence shows these two things happened on the same day. What more did they need?

Our attitude to risk was not documented anywhere and there was a whole section on the Fact Find dedicated to this that was not filled in.

I know it was not a requirement for us to sign the Fact Find but there was a place for the customer's signature and so why not get it signed?

I do take on board what you and others say about telling them too much but what did we know. The Ombudsman is supposed to save you the cost of taking this sort of thing through legal channels - and then you find him telling you he does not have to consider all of the evidence as this is not a court of law etc. etc. What is the ordinary person supposed to do? I have already said I could not afford to get an IFA's advice and only did this when we had to get a final response sent to the FO. She did say she would have put a different angle on our first letter of complaint but on the whole we had covered all of the arguments as far as she could see and that they wouldn't allow it - she was right - because it would put people like herself out of business.

We did appeal the decision - the FO has his own review team who upheld his decision. We didn't find that very suprising. We took it to the independent assessor (I think that was his title I would have to look it up) and he said he could not consider the decision taken or how it was arrived at only whether all of the procedures had been followed. Obviously all of the procedures were followed. That was a bit of a waste of time - he only told us that when he sent us his decision.

dunstonh

Our attitude to risk was not documented anywhere and there was a whole section on the Fact Find dedicated to this that was not filled in.

Was it covered in the suitability report. Whilst it is ideal to be on both, a minimum of one location is required.

I know it was not a requirement for us to sign the Fact Find but there was a place for the customer's signature and so why not get it signed?

Just because a box is there, doesnt mean you have to use it. The CIS may have given his a slapped wrist if he was still employed by them now if it was a CIS rule but its not an FSA breach and it has no impact on your complaint.

I wasnt saying you should lie as there is enough of that going on and its actually that which has caused some clamping down in some areas which has no doubt affected genuine complaints perhaps more harshly than they should be.

it just appears that although there was some areas of failure in the actions of CIS, the product sale was justified and therefore not a mis-sale. A bit like being asked a question and giving the right answer but giving the wrong reasoning.

Whilst I am no fan of claims companies (only the dodgy ones like Morgan Green), you may have been better off using one in your case. I am sure forum poster Defender of the Weak would have presented the complaint in a way that was required and known what to do in answer to the findings at the early stages.

EdInvestor

DH said

The churning part could be disregarded as you have clearly stated that you wanted to stop the pension and that the adviser didnt tell you to do it.

and mayb said:

Both the fact find and a statement by the CIS confirmed that I was saving for a lump sum at retirement

It might have been churning if the salesman had sold Mayb a different pension as Mayb didn't want a pension (which provides an income at retirement) but a savings plan (which provides a lump sum at retirement).

mayb_2

:mad: We may have done better if we had taken a different route with our claim.

The point I have been trying to make, and using our claim as an example really, is that the Ombudsman and the FSA are in most people's minds, there to protect the consumer.

This in fact is not really totally the case and other people have also posted that with the FSA their attempts to protect the industry can be to the detriment of the consumer.

When we originally contacted the CIS we really did not believe we were going to be told our Savings Plan had failed. We could not understand how that could have happened without our knowing about it. We naievely assumed that once we explained to the CIS how this was sold to us and that we hadn't been given any information about it they would put this right.
We did not anticipate having to take this to the Ombudsman and were not aware that this was a route for anything other than mortgage misselling claims. So we did not approach this with the idea that this is what would eventually happen or with a master plan on how to present it. Call us what you will but those are the facts.

Again we naievely assumed that the same rules would apply to this sale as applied to the misselling of our mortgage. We had not had to take our mortgage claim to the Ombudsman so didn't have any pre knowledge of how that would work.

I still contend that this sale broke the rules that apply to the sale of endowment mortgages with regards to attitude to risk and warning us of the risks that would be involved if we took this plan. I do not understand how the Ombudsman can ignore those facts - particularly in the light of the contents of the Fact Find/lack of paperwork situation. The FSA have told us that it broke the rules in terms of keeping us informed in a way that was of use to the consumer. There are other FSA regulations that we believe have been breached by the company and we are talking to the FSA about these too.

The CIS claimed that they had been unable to contact one of the Agents involved and yet he had retired from the CIS and they must have been paying his pension etc. The actual pensions Agent (who filled in the Fact Find) was still working for them and, despite several requests, did not put a report in writing to the company about our claim.

The Ombudsman settled for a copy of a document from another member of the company which I show here :-

09/Dec/2004 12.49 -SE8

Spoke to ******* and he supplied his report over the phone - states that all relevant CIS procedures would have bee follwed at the point of sale and also that the clients would have been made fully aware that the policy being effected was an endowment assurance policy.

This was after repeated requests for a written response from this Agent - the final one being sent to him in capital letters and bold.

The Fact Find itself was called a Profile Build by the CIS and as far as we were aware was the only document used to illustrate the sale etc. We think that if another document had been available they would have produced it. I know nothing of a suitablility report dunstonh but surely they would have used this if they had one.

I quote from the Final Decision of the Ombudsman:

I have based my assessment on the balance of probabilities, that is to say what is most likely to have happened in the light of all the evidence and given the circumstance prevailing. ....[/I]Although the firm was unable to currently reproduce the literature concerned, I am not persuaded that such material was not made available to Mr and Mrs ****** at the time.[/I]

The Fact Find and the CIS confirmed to the Ombudsman that no actual illustrations were given to us.

[

I]Despite the fact that specific material could not be recovered , I must explain that we are aware of the nature of the policy taken out, from information usually provided and our own experience of such investments. ...[/I]

In his provisionl decision letter the Ombudsman also wrote:

Mr & Mrs ****** have said that they did not receive any documentation relating to the policy, other than the policy document (this was for the Life Assurance) I do not accept that they would have been happy to contribute a sum of money to CIS each month, without receiving any details of the product into which they were investing. This information would have explained that returns were not guarantee.

This is barely the half of it. Without proof from the CIS the Ombudsman decided to take their word over ours.

When we challenged the Ombudsman's decision we were told the following in a letter

I must advise you that accountability for the breach of a regulatory or legal requirement is not for the Ombudsman itself which exists as an impartial and independent facility for the resolution of disputes between investors and regulated firms. ......it may only make awards on the basis of financial loss arising on the part of the investor and whether distress or inconvenience has been caused. It may not make an award of a punitive nature.

So aparently we have made no financial loss (probably FAs would agree with that one), and we suffered no distress or inconvenience - not many people reading my posts would agree with that one!

I think Crazy Saver would agree with me that we (those who feel we have been missold these policies) do feel we have made a financial loss no matter how it is explained to us otherwise.

I had a plan that I would have 30,000 or more to play with in 2009 and now find I have barely got my premiums back and that only because I found out what was happening at this point.

I had a plan that my mortgage would be paid off in 2017 by my mortgage endowment, instead a few years back I found I had a 43,000 mortgage to deal with and only 12 years left on the clock.

I agree with Crazy Saver however you paint it I don't feel ritch, but I do feel bitter, cynical, cheated and a lots more beside.

I think it is important that the full role of the Ombudsman and the FSA is made public. The remit of both of these bodies is confusing and they do not appear to be obliged to work closely together.

If several complaints are made and upheld by the Ombudsman regarding one particular company - this would filter through in reports made to the FSA who may begin to look more closely at the activities of that company. If the FSA has a company it has found in breach of its regulations, does this then inform the FO when making his decision? I don't think it does but perhaps someone can tell me different.

The FSA does not have to make public its actions against a firm if it believes this would break the first tenant of its remit, to protect the financial services industry from loss of consumer confidence.

How overall does this benefit the said, or should that be sad, consumer. Who set up these two bodies and what was the real thinking behind it?

Crazy Saver may never get an answer to her original question if these companies continue to be protected by the Ombudsman and the FSA in this way. This also works for the detriment of 'good companies' because they all get tarred with the same brush as far as consumer confidence is concerned.

Whilst that remains the case I think you can look forward to many more buy to lets dunstonh - if only because people can feel in control of their own futures with those (rightly or wrongly).

Sorry its so long.

EdInvestor

mayb wrote:

:mad: We may have done better if we had taken a different route with our claim.

I tend to think you could be right about that.

The point I have been trying to make, and using our claim as an example really, is that the Ombudsman and the FSA are in most people's minds, there to protect the consumer.

That's not so, as you now know. It is part of the FSA's remit but it has other responsibilities and duties which may conflict.The FOS is supposed to adjudicate on an impartial basis, ie it's not supposed to favour either side.

When we originally contacted the CIS we really did not believe we were going to be told our Savings Plan had failed.

You can't succeed with a misselling claim based on poor performance and even if you were missold you wouldn't be eligible for redress unless you had made a loss.

Again we naievely assumed that the same rules would apply to this sale as applied to the misselling of our mortgage.

Of course it wasn't a mortgage, so the same rules would not necessarily apply.

I still contend that this sale broke the rules that apply to the sale of endowment mortgages.

Possibly, but as it wasn't a mortgage, it's not relevant.

I agree with Crazy Saver however you paint it I don't feel ritch, but I do feel bitter, cynical, cheated and a lots more beside.

I can understand that, and you are certainly not alone - there are thousands of people who have lost their occupational pensions, and millions who have been affected by the Equitable fiasco.Not to mention more millions with endowment problems of course, though to some extent the rise in house prices will have helped them.

I think it is important that the full role of the Ombudsman and the FSA is made public. The remit of both of these bodies is confusing and they do not appear to be obliged to work closely together. If several complaints are made and upheld by the Ombudsman regarding one particular company - this would filter through in reports made to the FSA who may begin to look more closely at the activities of that company.

You may well be right that the public doesn't understand the role of these bodies very well, but their duties and remit are not a secret: all the details are on their websites:

https://www.fsa.gov.uk
https://www.financial-ombudsman.org.uk

AFAIK the FOS does alert the FSA if it starts getting a stream of complaints about certain companies or products - this certainly happened in the past, indeed the old ombudsman were regarded as a kind of 'early warning system' on problem products/providers/sales techniques .

If the FSA has a company it has found in breach of its regulations, does this then inform the FO when making his decision?

It publishes this info on its website and the more important aspects usually are reported in the press.

Who set up these two bodies and what was the real thinking behind it?

The Government. AFAIK it thought the previous regulatory arrangements were too lax.All the problems we see now emanate from the time before the system was tightened up, so looks like they were right.:(

Clearing up the mess has been a pretty nasty task and it's not over yet, but there don't seem to have been too many new scandals emerging covering products invented or taken up since the FSA was set up 7 years ago - yet, anyway.

So perhaps there's hope for a better future, especially now that people themselves are more focussed on what's going on - reclaiming bank charges, and chasing up endowment complaints etc.

That's the key to a cleaner industry IMHO: if investors and savers are savvy and on the ball, then companies can't get away with this kind of bad behaviour. In the past they were able to take advanatge because many people were not well-informed about finance.

mayb_2

I do agree with a fair bit of that but don't forget EdInvestor that the Ombudsman would not have considered my case at all if it hinged on the performance of the policy so it was not about that that I complained. It was the total lack of information about the performance of the policy that caused the problem.

The question I am asking is if the same rules used to describe misselling of a mortgage endowment policy do not apply to the misselling of any other endowment policy then why not? Perhaps because it would prove an expensive venture?

If they did not apply why was the case not thrown out straight away. Why did the Ombudsman ask the CIS about the supply of information etc if it was not relevant and why did he give an opinion on whether it was supplied or not?

If I remember rightly our policy could have become paid up after 5 years, or it could have been cashed in for a reduced amount. If we knew what was going on we may have made either of those decisions or just stopped paying it anyway. What would our financial situation have been now if we had used the money to pay capital sums off our mortgage for instance. 11 years x 50 = 6,600. Our interest payments would have been reduced because of this and I am unable to work the maths out on that. The other option would have been ISAs and whatever preceeded them. Tax free interest.

If the Ombudsman cannot consider the behaviour of the Company in relation to the regulatory requirements etc. and the FSA cannot consider the claims angle in relationship to the Company - we fell neatly between these two stools. It would have benefited me greatly and other people too I am sure, if these two agencies worked more closely together. I do not know how many complaints about this company of a similar vein have been made to either body although I am familiar with them now. I would not in the normal run of my life have been visiting the website of either of them The remit of the Ombudsman is certainly not obvious and when I asked him for it I got a rather jumbled response which basically referred me back the FSA.

In our case the FSA said that the company was required to supply us with an annual report on the performance of our plan, but the Ombudsman decided that we must have been supplied with this information despite the lack of evidence to support this. Even more

The FSA does not shout its remit from the roof tops on its website either. If we are relying on them visiting each other's websites for information or reading the press that will not really cut it will it? So either they pass this information directly to each other and use it to inform their decision making or they don't.

If you think about it, the FSA advise people to deal with companies regulated by themselves. What does that mean if when these regulations are broken it all becomes so cloak and dagger? How many times does a company have to breach the regulations to get more than a private slap on the wrist?

You have not addressed the evidence and response part of my post and I would be interested in your opinion on that.

dunstonh

It was the total lack of information about the performance of the policy that caused the problem.

The lack of information after the event is a different issue and has no impact on the decision to take it out at the start. So, the FOS have probably have looked at that and said "does that affect the sale of the policy?" and the answer is no.

The question I am asking is if the same rules used to describe misselling of a mortgage endowment policy do not apply to the misselling of any other endowment policy then why not? Perhaps because it would prove an expensive venture?

Mortgage endowments are considered a nil risk vs investment risk issue. Savings/investments are not considered a nil risk vs investment risk issue.

It has nothing to do with cost. They do uphold complaints in that area as well but your invesment had nothing to do with mortgages so why should mortgages come into it?

I would be surprised if your focus on lack of performance information after the event has helped the FOS decide that your focus of your complaint is performance and you cannot complain about that as no-one knows what performance is going to be.

If they did not apply why was the case not thrown out straight away. Why did the Ombudsman ask the CIS about the supply of information etc if it was not relevant and why did he give an opinion on whether it was supplied or not?

The FOS want to see the documentation. They arent going to take your word for it. They want to see what the CIS say as well. There will be communication and clarifications between the parties.

If we knew what was going on we may have made either of those decisions or just stopped paying it anyway. What would our financial situation have been now if we had used the money to pay capital sums off our mortgage for instance. 11 years x 50 = 6,600. Our interest payments would have been reduced because of this and I am unable to work the maths out on that. The other option would have been ISAs and whatever preceeded them. Tax free interest.

None of that effects the advice to proceed in the first place. Again, that would have been disregarded.

If the Ombudsman cannot consider the behaviour of the Company in relation to the regulatory requirements etc. and the FSA cannot consider the claims angle in relationship to the Company - we fell neatly between these two stools. It would have benefited me greatly and other people too I am sure, if these two agencies worked more closely together.

The FSA set the rules and the FOS abide by them. What else does there need to be?

I do not know how many complaints about this company of a similar vein have been made to either body although I am familiar with them now. I would not in the normal run of my life have been visiting the website of either of them The remit of the Ombudsman is certainly not obvious and when I asked him for it I got a rather jumbled response which basically referred me back the FSA.

The FSA review complaints on compliance audits and trends are looked for and are dealt with accordingly.

In our case the FSA said that the company was required to supply us with an annual report on the performance of our plan, but the Ombudsman decided that we must have been supplied with this information despite the lack of evidence to support this. Even more

Nothing to do with the sale of the policy again. This is all after the event.

If you think about it, the FSA advise people to deal with companies regulated by themselves. What does that mean if when these regulations are broken it all becomes so cloak and dagger?

It doesnt become cloak and dagger. You get some misbehaving at times but they rarely win their argument. L&G are about the only ones to have scored a victory over the FSA in recent times.

How many times does a company have to breach the regulations to get more than a private slap on the wrist?

Have you seen the number of fines that have been handed out of the years? There have been loads banned from financial services in the UK as well. Even if a firm identifies a problem, fixes it and reports it to the FSA, they usually end up with a fine.

Regulation didnt just occur overnight. It came about in stages and changes fairly often. A number of things in place today were not in place 10 years ago. So, when you look at a complaint of 1994, you have to look at 1994 rules. Not 2006 rules.

In your case, you have to stop looking at all the things that happened after the sale of the policy. The only relevant things to your complaint are those that happened prior to the sale. Everything after the event is disregarded. When you remove all the after event issues, you are left with churning (which appears to have been documented as not wanted to increase an income but to build a lump sum. In which case the switch is valid) and whether you were aware of the investment risk. With profits in 1994 would be considered low risk (its considered medium risk today). So, if you dropped in that you were a cautious investor or a low risk investor in your complaint, the product matches your risk.

mayb_2

This all sounds like smoke and mirrors again to me dunstonh.

I did look at the things involving the sale of the policy - no risk assessment of any sort - no warning that this may not give back the return promised. The lack of information was at the event as well as after it.

You cannot get away from the fact that information should have been given for us to make an informed choice of what to do with our money both at the time and since. If this is not taken into account then it should be.

What would the situation be if this did involve a mortgage is relevant as the policies work in the same way in that they rely on an investment to produce a profit. People were given this information on a yearly basis about their mortgage endowment and we should have been given information in the same way. The CIS sold endowment mortgage policies which were invested in the same fund. I ask again if the rules are not the same then why not??

I would be surprised if your focus on lack of performance information after the event has helped the FOS decide that your focus of your complaint is performance and you cannot complain about that as no-one knows what performance is going to be.

Your focus on this issue I have answered several times already - The Ombudsman clearly stated to us at the beginning and in a letter that if our complaint had been one of performance of a plan he would not be looking at it. We both understood that. I am not going to include my letters to the Ombudsman or his replies to us here as my posts are too long already and you would probably still repeat this point. Please believe me it was not so.

The FOS want to see the documentation. They arent going to take your word for it. They want to see what the CIS say as well. There will be communication and clarifications between the parties.

Exactly and when there was no documentation produced by the CIS the Ombudsman decided to take their word for it anyway.

It doesnt become cloak and dagger. You get some misbehaving at times but they rarely win their argument. L&G are about the only ones to have scored a victory over the FSA in recent times

.

It does when they will not tell you what if any action they are taking with regards to a complaint because they have to protect the financial industry from lack of confidence. It is not enough for them to say they are taking a complaint seriously if they are not prepared to tell you how.

Have you seen the number of fines that have been handed out of the years? There have been loads banned from financial services in the UK as well. Even if a firm identifies a problem, fixes it and reports it to the FSA, they usually end up with a fine.

The only ones I am aware of are the ones that made the news - a handfull.
We cannot tell how many complaints are made that are not made public - where exactly is this list published and would the ordinary public be able to see it easily.

Everything after the event is disregarded. When you remove all the after event issues, you are left with churning (which appears to have been documented as not wanted to increase an income but to build a lump sum. In which case the switch is valid

However it was documented is not really the point as we were not told that that is what we were doing and saw no documentation. I cancelled the pension because I could not afford it, particularly in the light of the returns projected for it. The Agent could have explained to me at that point that this was an income policy and that I could increase it by increasing my premiums. I may or may not have agreed to do that. However, he did not go that route, he set about selling me something else telling me that this would give me a large lump sum that I could buy a pension with. I had to assume that as this was costing me twice as much it was going to be a better return and 30000 sounded too good to turn down