MSE News: A confession: I've mis-sold PPI

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  • 2sides2everystory
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    Well I am sceptical of any "rowed-in" salesman in a workplace selling financial services products. That follows my experience of being sold a best thing since sliced bread presentation of a final salary pension scheme which four years later was frozen and replaced by a different rowed-in sales team who presented to us all saying that money-purchase was the best thing since sliced bread to replace it, and then rowed in salesman #1 wound up the frozen FS scheme 4 more years after that, to my obvious detriment.

    Plenty of commissions and fees came out of those shenanigans and who paid? I did.

    But I don't doubt one reason dunstonh is voicing an air of caution is because you may be playing with fire in your own backyard. Firstly, friendly societies have always occupied a slightly elevated position in establishment reputation terms (probably not justified in recent decades). Secondly this one seems inextricably bound up with your union whom I guess you don't want to be on the wrong side of, and thirdly, the actual products might not be so bad even if they ain't going to ring any bells for a few years yet.

    Problem is, with some justification, there is a public mood out there that says the whole financial services industry is rotten, has busted our country, and now it is our turn to redistribute the wealth back to our pockets and never mind all this 10 year 20 year 30 year malarky. Life insurers, bankers, friendly societies, savings and loan? They're all the same aren't they? I do have some sympathy with it.

    However, and this is just a personal preservation type feeling, before you embark on your local venture, make sure that you know what you want to achieve because it is likely you are going to put a lot of people's noses personally out of joint at your workplace and union, and the union might be the first to try to prove you have indeed gone off half-cocked.
  • dunstonh
    dunstonh Posts: 116,655 Forumite
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    Basically it has the same name as our union which is CWU and is even run in the same building as our union.

    Here is a rule of thumb for you. Never buy financial products via a union or union represented company. I have only ever seen obsolete and expensive products.

    Here is another rule of thumb. Never buy financial products from tied agents/sales reps of the insurer/provider.

    The product you have is naff. I wouldnt touch it with a bargepole. However, a tied rep of the provider only has their options. So, if you choose to buy it then there is nothing you can do about it. I would certainly encourage fellow work members to not do it again. However, in respect of the what has gone on there is no complaint here.

    You used a salesperson to buy a product. The salesperson gets paid a tiddly £100 for each one. The biggest earner is probably the Union. Sales people sell. However, the product is classified as a regular contribution investment product. Not a life assurance. The fact it has an element of life assurance doesnt matter. It is how all old regular contribution investment products used to be. As I said, these are obsolete compared to whole of market options but a tied sales rep doesnt have to be concerned with that.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • kittykitten
    kittykitten Posts: 418 Forumite
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    I too should probably confess on here. I was 17 years old when I started working saturdays and school holidays as counter staff for a well known high street bank. We had very high targets that we were expected to hit, the only redeeming feature being that we, as counter staff, weren't expected to actually sell the (fill in the missing blank...naff saving product, loan with PPI, over-priced home/car insurance, etc etc) but convince customers to book an appointment with one of our advisors.

    In many ways this was the hardest part, as once the advisors have the customers in a room they've basically, with most people, got a captive audience and free rein to sell whatever they can. I never felt comfortable with the whole 'referring' process, but the pressure, particularly for those of us who were young and naive, having no life experience of insurance, loans, etc, was immense. More so for me because my aunty was a manager at the branch where I worked, so there was added pressure to hit targets right there!
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  • 2sides2everystory
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    I never felt comfortable with the whole 'referring' process, but the pressure, particularly for those of us who were young and naive, having no life experience of insurance, loans, etc, was immense.
    KK, I think you have struck at the heart of the problem in that one sentence. They say that a sign of getting old is that the policemen seem younger, but the banks have long had a penchant for getting them young with no intent of promoting them particularly, but merely to immerse them in their ways before they get the broader life experience you refer to. Some of the worst offenders at the banks are the new breed of "managers" (they are not managers at all in the real sense - just progress chasers, but their Mum's are proud) who have known nothing else since they left school and who are prepared to follow the company line unquestioningly and to the letter. They are the ones who apply the pressure. Many of them need a mind remap. They think the stress and staff turnover due to the pressures they administer is a normal symptom of staff who are "not cut out to be sales persons" i.e. natural wastage. Many of these "managers" are indeed somebody's aunt.
  • Farmiloe1980
    Farmiloe1980 Posts: 37 Forumite
    edited 11 May 2011 at 2:24PM
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    dunstonh wrote: »
    Here is a rule of thumb for you. Never buy financial products via a union or union represented company. I have only ever seen obsolete and expensive products.

    Here is another rule of thumb. Never buy financial products from tied agents/sales reps of the insurer/provider.

    The product you have is naff. I wouldnt touch it with a bargepole. However, a tied rep of the provider only has their options. So, if you choose to buy it then there is nothing you can do about it. I would certainly encourage fellow work members to not do it again. However, in respect of the what has gone on there is no complaint here.

    You used a salesperson to buy a product. The salesperson gets paid a tiddly £100 for each one. The biggest earner is probably the Union. Sales people sell. However, the product is classified as a regular contribution investment product. Not a life assurance. The fact it has an element of life assurance doesnt matter. It is how all old regular contribution investment products used to be. As I said, these are obsolete compared to whole of market options but a tied sales rep doesnt have to be concerned with that.

    I still feel we have been mis-sold this product.

    Below is the letter i sent to them making the complaint, they have replied saying they are willing to send someone into our office to discuss it, surly if they knew we had no case they would just write back saying nothings wrong and get on with i?

    Letter:

    I am writing in response to your letter of 04th April 2011 concerning the recent telephone call I made on 29th March 2011 about my policy.

    I am grateful for your quick response however you have made a decision based on not actually hearing my reasons as to why my policy was sold to me through misleading information.

    The fact that you have provided me with information about the current situation of the friendly society is all good and well however I already understand that there have been recent financial problems and that bonuses paid are maybe not as high as someone might expect and that the society has to be cautious with this.
    This is not why I believe the policy was mis-sold, that reasoning all relates back to me taking out the policy in the first place.

    When your salesman (NAME REMOVED I think his name was) approached me to take out a policy it was all about it being a savings policy, not a life cover/insurance policy.
    Telling me that it was a great scheme as it was backed by the union and that you could save some money over so many years and then maybe treat yourself to something nice when the policy matured and paid out, unless you cashed in early and then you would probably lose money out of it, in other words it was a long term savings plan.
    You get a bonus each year and that is your interest is what I was told.
    I understood this fine and I was happy to commit to it.

    “The minimum you put in is the minimum you will get out from it” was one of the things he said to me – never at any point did he state that I was taking out life cover which comes at a cost to your policy, just the fact that if you did die then somebody can benefit from the money – just like a Royal Mail pension!

    He asked me what I would want to pay a week, I remember being unsure so he suggested “£10.00 per week, you can afford £10.00 a week can’t you”, I remember thinking yeah that’s fine and so that was entered as my weekly amount; it turned out to be £10.06 to fit in with the policy.
    I was then told that my assured minimum amount was £7,000.00 – and as I’ve already been told that I get back penny for penny then I assumed that this was the amount that I would pay into the policy over its term, which we agreed would be 15 years at his suggestion.
    I was also told that everything was tax free and I estimated to myself that I could get about £8,000.00 back.

    So policy set up and I’ve just let it run the course so far as I’ve known that I can’t do anything with it until the 15 years are up.
    That was until I got my 2010 bonus certificate from you, 8 years into the policy; I started to take note of my bonus amount which was £396.92 + £36.98 to be added as the 2010 bonus.
    I felt that for just over £400.00 after 8 years and at a rate of £35-40.00 per year in bonuses that there was no way that I was going to hit the £8,000.00 that I had estimated for myself.

    I was now curious at the amount that I was actually paying into the policy, was it really £7,000.00 or was it something else.
    So I did a quick calculation in my head - £10pw x 52weeks = £520.00 x 15 years was about £7,500.00 – So I realised that I went into the policy £500.00 down to what I will pay into it.
    I then worked it out properly and got £10.06 x 52 = £523.12 x 15 years = £7,846.80!

    This has meant that by signing up to a policy I lost £846.80 straight away and was then relying on the bonuses to start paying me back before I start earning any interest.
    This is something that I was never told and if I had been told this then I would never have signed up to one of your policies.

    I then tried to work out my potential amount that I might receive after the 15 years, and although the worst case scenario would be no bonuses on 1 or more years I have treated the worst case scenario as a 0.5% of the assured amount and a 0.5% on the declared bonuses per year from now until the final year.
    I was very shocked when not only did I realise that I wasn’t going to hit the £8,000.00 I had hoped for but the fact that I’m probably not even going to get back the exact amount I have put in- over £100.00 less.

    I also worked out that my policy stands at £7,433.90 now but had it been earning interest from the amount I put in, it would be sitting at about £8,300.00 – almost £1,000 difference and so it will end up over £1,000.00 out by the end of its 15 year term.

    This was sold to me as a savings policy and it was always said in the conversation that it was a savings policy.
    If I had put the money in a bank I would be earning interest on the money from £7,846.80 – not £7,000.00.
    I don’t see how if a policy pays a bonus every year that you can come out with less money then what you paid into it – logical thinking tells you that it doesn’t happen.

    I have since learnt that £25.00 per month is the maximum you can invest in a tax free savings policy of this type across all companies.
    So why was I allowed and talked into saving the equivalent of £43.59 every month which clearly put me into a taxable situation – if I had known this I wouldn’t have signed up for it yet again.
    It seems that only because of your investigation from HMRC that I have been saved from paying tax on its maturity.

    I was also told that I would be able to use the small loans facility every year at a great interest rate.
    But as it turns out because I pay too much (over the tax threshold) I’m not allowed to do that.
    This was another selling point to me that NAME REMOVED used to get me to take out the policy.

    I remember noting when I took the policy out that NAME REMOVED would receive £123.62 for the work, I didn’t make any comment about it but had read it out aloud.
    He was quick to defend this saying he would get it in “dribs and drabs” as if he was worried about what I might think but I was just purely reading it.
    I feel now that the sort of personality that NAME REMOVED portrayed and his quick defence of his commission was because he was mis selling policy’s just to bump up his commission.

    I have now started speaking to other people within Royal Mails NAME REMOVED office where I work and so far the people I have spoken too all believe that they have been sold a savings policy too which pays back as a minimum, to the penny what you put in.
    However this doesn’t seem to be the case, but they were all sold by the same person!
    This is a serious problem and I’m not the only person who feels this way, I believe that you need to take this complaint very seriously as you are about to be receiving a whole load of mis-selling complaints.
    I have put their names at the bottom of this policy and I will now continue to find anyone else that believes they have been mis-sold their policy(s)
    3 of these people are CWU local/area reps! – Even they feel it’s been mis sold by NAME REMOVED

    2 of these people have 4 policies’s each – all in their own names – why would they need 4 lots of life cover when both have life cover attached to their mortgages.
    Another 2 also have 3 policy’s each, all in their own name. – they thought it was a savings plan.

    Some of these policies are for just 10 years, your wording states that you will not get back what you put in for under 15 years, if this is the case then they didn’t get told that otherwise they wouldn’t have taken out the policies – MIS-SOLD POLICY!

    1 person was 22 at the time, single, no kids, no mortgage and lived with his parents – why would he need life cover?? – simple he wouldn’t need it when his Royal Mail pension would pay more than enough if he died, to his Mum!
    He thought it was a savings policy that is why – he didn’t need or want life insurance.

    I too didn’t need a life insurance, just wanted a savings policy and that’s what I believe I have been sold, but clearly not.
    This is why I believe my policy was mis-sold.

    Just before I made my initial phone call complaint, NAME REMOVED was back in our office for his yearly selling.
    I said to him that the I think the policy was not very good that he sold me, he replied;

    “yeah they are a load of crap, I was made redundant from them last year, I’m with this other mob now (P.O.I.S)”!

    I and many others await your reply

    END
  • 2sides2everystory
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    Classic :rotfl:

    While he's in his candid mood, can you get him on here to confess ? :money:
  • Farmiloe1980
    Farmiloe1980 Posts: 37 Forumite
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    Classic :rotfl:

    While he's in his candid mood, can you get him on here to confess ? :money:
    yeah if only, that would be great :)
  • dunstonh
    dunstonh Posts: 116,655 Forumite
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    Below is the letter i sent to them making the complaint, they have replied saying they are willing to send someone into our office to discuss it, surly if they knew we had no case they would just write back saying nothings wrong and get on with i?

    They have a requirement under FSA rules to investigate the allegations you are making.
    He asked me what I would want to pay a week, I remember being unsure so he suggested “£10.00 per week, you can afford £10.00 a week can’t you”, I remember thinking yeah that’s fine and so that was entered as my weekly amount; it turned out to be £10.06 to fit in with the policy.

    Friendly society plans have a maximum of £25pm If its £10.06 per week then it will not be a friendly society savings plan. I wonder if they have set up endowments instead.

    Still doesnt indicate a mis-sale as tied sales reps are only legally required to offer the most suitable product in their range. If their range only has naff and obsolete products then that is what they will offer. If he has done endowments but not friendly society plans then there is scope for mis-sale there.

    Can you give us the actual name of the product you were sold as the impression was they were friendly society plans but from what you have said above that cant be the case.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Farmiloe1980
    Farmiloe1980 Posts: 37 Forumite
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    dunstonh wrote: »
    They have a requirement under FSA rules to investigate the allegations you are making.



    Friendly society plans have a maximum of £25pm If its £10.06 per week then it will not be a friendly society savings plan. I wonder if they have set up endowments instead.

    Still doesnt indicate a mis-sale as tied sales reps are only legally required to offer the most suitable product in their range. If their range only has naff and obsolete products then that is what they will offer. If he has done endowments but not friendly society plans then there is scope for mis-sale there.

    Can you give us the actual name of the product you were sold as the impression was they were friendly society plans but from what you have said above that cant be the case.

    Even he said they were tax free and at the time i didn't know that £25.00pm was the maximum.
    I thought because you are saving with a friendly society any amount saved would be tax free.
    Its only recently that i have learnt that £25 across all companies is the maximum.

    CWFS were investigated a few years ago by HMRC and i think its because they were selling policys over £5.66 a week.
    Because when they sold them they were sold as tax exempt and now they are saying that my policy is actually taxable however because of there mistake they are covering all the tax liabilites.

    They also had a small loans facility like i said in my letter but since the investigation by HMRC i'm not longer allowed one because my policy is classed as taxable.

    I have looked as my details and the little booklet i have with my certificate says :

    Nature Of The Policy: - The policy is a with profits endowment assurance.

    I have anothers guys policy though which is identical to mine and his says: The policy is a with profits endowment Insurance.

    Now i thought an assurance and Insurance are 2 completley different products?

    There are some key facts and in there it says:

    What is a Life and Savings Policy?
    • A life and savings policy is an insurance policy designed to give you life cover for the period of the policy term
    • The sum assured is guaranteed at the commencement of the contract. A reversionary bonus, expresses as a percentage of the sum assured, is declared annually. A terminal bonus is added to the policy proceeds when the policy becomes a claim or reaches maturity. Declared bonuses are guaranteed ands cannot be taken away.
    • If you live until the end of the policy term you will be paid a lump sum tax free payment
    • A life and savings policy allows your savings to benefit from the growth potential of professionally managed worldwide stock market investment.
    So that says it is an insurance policy and is tax free!:mad:
  • dunstonh
    dunstonh Posts: 116,655 Forumite
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    Nature Of The Policy: - The policy is a with profits endowment assurance.

    Right, so 100% not a friendly society savings plan (although the premium already indicated that). So, not tax free as told.

    It may be worth finding out of the friendly society issues ISAs. ISAs trump endowments (by a long long way). If they do issue them then that adds a mis-sale reason.

    However, the life assurance element isnt going to get you far. Endowments are required to have life assurance. However, that sum assured is integrated into the return so its not generally considered the same as a proper life assurance policy (for family protection).
    I have anothers guys policy though which is identical to mine and his says: The policy is a with profits endowment Insurance.

    Now i thought an assurance and Insurance are 2 completley different products?

    Assurance is the correct name. However, some providers have dumbed down and Americanised and started using insurance for convenience (a number of financial products have dumbed down in recent years in similar ways).
    So that says it is an insurance policy and is tax free!

    it is not tax free. The provider pays tax within the investments and the payout at the end has no further tax liability to you. The phrase that is often used for them is "tax paid".

    An ISA is tax free. A friendly society savings plan tax is tax free. A savings endowment is not tax free.

    Most providers stopped issuing endowments back in the late 90s. Only a few direct marketing carried on until around 2004 (AXA cashbuilder plans - the old Carol Smilie adverts etc). Advice ones are virtually unheard of for over a decade.

    Thanks for providing the extra detail. It has made a difference. It really does look like mis-sale situation now.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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