Endowment misselling claim

mrorange2011

Please can somebody help with my situation. We were advised to take out 2 endowment mortgages in 1991 and were contacted by the bank advising that there was a shortfall on one and the other was on track in decemeber 2006. we subsequently recieved approximately £1000 because of the shortfall. However we were told when we took out the endowment that we would receive about £70000 at the end. At the time we thought that this was all we would get back but now we are wondering whether we received adequate compesation for it. is there anything we can do now.

opinions4u

If you have received compensation, it should be calculated against a predefined formula.

Basically, if at the point you had surrendered the policy and put the proceeds plus the compensation towards the mortgage, changing the mortgage to a repayment mortgage, you would (almost certainly) not now be out of pocket.

So the likelihood of making any further progress with a claim is somewhere around the "no chance" level.

mrorange2011

is there nothing that can be done regarding misselling in that we were promised £70K lump sum

dunstonh

At the time we thought that this was all we would get back but now we are wondering whether we received adequate compesation for it. is there anything we can do now.

The redress of £1000 was paid to allow you to convert your mortgage to a repayment mortgage and pay the full surrender value plus the £1000 into the repayment mortgage to put you in the position you would have been had you been on repayment mortgage from the start.

If at that point you decided to stay with endowment then that was your choice. no-one else. So, therefore any complaint you have is against yourself.

You do not get a second bite of the cherry because of your decision not to switch to repayment mortgage.

opinions4u

mrorange2011 wrote: »

is there nothing that can be done regarding misselling in that we were promised £70K lump sum

No. Because you've already been told that this "promise" was unlikely to be fulfilled and compensated accordingly.

For reasons only you can explain, you then continued as if everythnig was hunky dory. That's your call, but don't expect somebody else to compensate you.

mrorange2011

thank you both for your reply but you are missing the point, we didnt carry on with the endowment, we had to in the end switch to an interest only, (i am trying to find all the correspondance) because we couldnt afford to switch to a repayment mortgage, it was too expensive for us and we couldnt have kept up the repayments and would have lost eveything. we initially took out the endowment so we would have the £70K lump sum at the end of the policy, we we told how fantatstic this deal was and we would have paid for our house early and had a lump sum at the end had it come to fruition, we would have been in a great position. However because of the bad advice this has now left us in a situtation were we still have about £40K outstanding on our mortgage, my question is still the same, can we do anyting about this as the bad advice has basically screwed us up as we were depending on the lump sum and now years down the line been left in more debt. I have heard that some people have claimed back large amounts from missold endowments and that the banks have to put you back in the position you were when the mortgage was sold to you. i know you both say that if we had reinvested we would have covered the mortgage, but we couldnt afford too and we took out the endowment because we would get the lump sum at the end which obviously didnt happen

dunstonh

thank you both for your reply but you are missing the point, we didnt carry on with the endowment, we had to in the end switch to an interest only, (i am trying to find all the correspondance) because we couldnt afford to switch to a repayment mortgage, it was too expensive for us and we couldnt have kept up the repayments and would have lost eveything.

Endowments were often chosen by people because they were cheaper than repayment mortgages. I am going to assume that you didnt admit that as a reason for choice in your complaint letter otherwise it would probably have resulted in your complaint being rejected.

However, the difference was not normally significant in todays terms. Typically £10-£30pm on a typical mortgage.

my question is still the same, can we do anyting about this as the bad advice has basically screwed us up as we were depending on the lump sum and now years down the line been left in more debt.

No as you have been paid redress based on the difference. With a redress payment of just £1000, then the actual loss at the point of complaint was very small.

I have heard that some people have claimed back large amounts from missold endowments and that the banks have to put you back in the position you were when the mortgage was sold to you.

I have also seen complaints upheld but no money paid as the person is better off. You could have two endowments taken out for the same sum assured and same term but set up slightly differently. 15 years later, one could be in surplus and the other in shortfall. What others have will not be the same as what you have.

The redress payment you were paid did put you back in the position you would have been had you been on repayment mortgage. You are never put back in the position you were at the point of mortgage sale as that would involve you selling your house.

I think you misunderstand what you should have done.

You currently have an interest only mortgage of £70k. When the complaint was upheld, you should have surrendered the endowment and used the surrender value and redress payment to reduce the amount borrowed. That outstanding balance should then be converted to repayment basis (not the whole 70k). e.g. if surrender value was £25k and redress payment £1k then the £70k would be reduced to 44k and that 44k converted to repayment basis.

It would have cost you more per month but your complaint said that is what you wanted. But it probably would have cost no more than say £50pm extra.

mrorange2011

OK Thank you both for your advice

magpiecottage

DunstonH is correct in what he says.

From what you say, it is possible that one of the endowments has never had a "red" letter and you may be able to make a complaint about that one. but such cases are now very few and far between.

The firm you complained to may also be liable if they failed to explain that the redress plus the surrender value of the endowment was intended to put you into the position you would have been at that time if you had taken out a repayment mortgage from outset.

What you would then be doing is not complaining about the original sale but how that complaint had been handled as you were unable to make a properly informed decision.

However, such a complaint would be difficult to argue properly. I doubt a claims management company would know how to do it.