Endowment shortfall

jm28cardiff

EdInvestor wrote:

As you will be well aware Abbey is not the only provider which routinely rejected justified complaints and was told by the regulator to go back and do it again.

People are not stupid.They know they may not be treated fairly, whether by the selling company or by the FOS. So they seek help.

Complaint handlers would not have viable businesses if the existing complaints and arbitration system worked properly and was seen as fair.

I'd have thought that's pretty obvious.

The insurance company has to look at complaints fairly, as they dont want FSA jumping all over them, and don't want to be ordered to do a full review of all endowment sales.

As far as FOS go, the third parties have very little to do with that. A complaint is referred to FOS, the adjudicators thrash things out with the insurance company, and they either agree on an outcome, or refer it to an Ombudsman. Apart from the initial referral, I don't see what role they play at this stage. The adjudicator (and the insurer) make their decision based on the evidence on file, not from some letter written by a third party.

EdInvestor

jm28cardiff wrote:

The insurance company has to look at complaints fairly, as they dont want FSA jumping all over them, and don't want to be ordered to do a full review of all endowment sales.

You say this but it's patently not the case, as the FSA regularly has to order reviews.

The adjudicator (and the insurer) make their decision based on the evidence on file, not from some letter written by a third party.

Since there's frequently no evidence on file, a competent complaints handler could well make a big difference, as we have seen on this site in the past.:)

jm28cardiff

If theres no file, its an open and shut case, and the individual could make that complaint for themselves and not hand over 25% of their redress!

dunstonh

In an ideal world there would be no need for claims companies.

However, its not ideal and firms like Abbey did the industry no favours. That said, firms like Morgan Green do the claims companies no favours. They are telling consumers lies to get them to pay for their services and when the standard letter complaint goes in listing things which are blatently false, it is going to get the backs up of those on the other side.

The claims companies will highlight Abbey as an example of a bad financial services company and the financial services comapnies will highlight Morgan Green as a bad claims company.

The claims companies need some regulation and they ought to be accountable more for their actions. Some of the actions are almost fraudulent. They need to kick out the bad ones just as financial services has been attempting to do the same for the last 10 years.

jm28cardiff

That'll be the next big complaint area, complaints against complaint handling companies!

There are some comlpaint handling companies (naming no names) that refer almost 100% of rejected complaints to FOS. They don't consider whether the firm has made a fair decision, they just want their fee.

All this will be over before not too long anyway, with time barring and what not, there isnt much left in all this, what are those companies going to do then?

dunstonh

There are some comlpaint handling companies (naming no names) that refer almost 100% of rejected complaints to FOS. They don't consider whether the firm has made a fair decision, they just want their fee.

We were told that as well. It didnt matter if you rejected it and showed evidence, the claims company would automatically take it to the FOS whether it had a chance of winning or not.

All this will be over before not too long anyway, with time barring and what not, there isnt much left in all this, what are those companies going to do then?

There are always going to be people needing to make complaints. However, they have missed the boat on with profits investment bonds but some are looking at contracting out. Although the FSA will probably stop that in its tracks with it's announcement in the new year. Plus that is a harder one to prove as its not a nil risk option vs a risk option. Its two different risk based options with no nil risk option existing.

The endowment issue has resulted in some good things though. Suitability reports are better written than before and documentation is now being looked after much more carefully. Client files are more detailed and advisers are taking documentation more seriously. Pre issuing suitability reports and getting them signed by the client are things which are starting to become more common.

In the past, no-one cared much about client files as they had never needed them and just look how many complaints havent been upheld but have had to pay a redress because of missing documentation.

EdInvestor

However, they have missed the boat on with profits investment bonds...

Have you noticed how much business has been done lately with other investment and offshore bonds ? It's over the 20bn quid a year mark.

Absolute racing certainty to include loads of misselling to basic rate and non taxpayers conned by scare stories on IHT and long term care and not advised of the risks, penalties, extra taxes and threat to capital.

Just a matter of time, mark my words.

I'm also not so sure you should be all that relaxed about SERPS misselling, given the number of these old small,possibly forgotten pensions that are trapped in zombie funds.

Many of these people are going to lose out massively compared with what they would have got with S2P and they will all be people who really need the money - rather than better-off types who might write it off.

Less well off people are fighting back strongly these days - over unfair bank charges and Farepak, for instance. It may take some time to come to the boil, but you can see there could be quite a fuss over this issue eventually.

defender_of_the_weak

There are umpty thousand advisers out there selling products every week. Given that most of them still hold little more than an O level I think (and evidence of recent submissions to my company shows it) that the potential to mis-sell financial services products is still out there and will continue to be so for some time.

We are currently handling cases of pension transfers, SERPs, drawdown, investment bonds and unit trusts, payment protection and, permanent health insurance and whole of life plans

Endowments may have woken the public up but now it has they will not just fade into the mist.

As other posters have stated, if they could trust the banks and insurance companies to treat them fairly I would never have started this business. On the flip side, if I hadn't seen so many people getting ripped off with fees of 25-50 percent I probably would not have started it either

dunstonh

Absolute racing certainty to include loads of misselling to basic rate and non taxpayers conned by scare stories on IHT and long term care and not advised of the risks, penalties, extra taxes and threat to capital.

As long as the ISA is sold as well and its not just bond, then its unlikely to be upheld as the taxation differences between bonds and unit trusts is too small.

I'm also not so sure you should be all that relaxed about SERPS misselling, given the number of these old small,possibly forgotten pensions that are trapped in zombie funds.

Thats a risk of investment return and not whether you should contract in/out in the first place. The fact that a naff investment is used doesnt mean the actual contracting out advice was wrong.

Many of these people are going to lose out massively compared with what they would have got with S2P and they will all be people who really need the money - rather than better-off types who might write it off.

In 1996, everyone contracted out was financially better off than those contracting in. In 2002, everyone contracting out was worse off. In 2006, a third are better off with two thirds worse off. So, when the crash occured, it went down, as the recovery occurs, it goes up.

The problem with S2P is Labour reducing the rebates every year and that is not something you can predict on a product sold in 1989.

There is pressure on the Govt and the Conservatives seem to understand this with their comments about watering down consumer protection, that where there are multiple options with an unknown outcome, you cant complain if, with hindsight, the wrong one was picked.

Given that most of them still hold little more than an O level I think (and evidence of recent submissions to my company shows it) that the potential to mis-sell financial services products is still out there and will continue to be so for some time.

There is the potential for every car driver to drive into brick walls but they dont. It is damned easy to mis-sell. However, increasingly, its harder to remain in the business if you do mis-sell. The FOS published stats earlier this year that over 80% of advisers in business today have never had a complaint. A lot of these issues are legacy and not current.

you_llneverwalkalone

defender_of_the_weak wrote:

A few corrections to some of the nonsense put forward

Its not six years from the first red letter it is only three (given this was posted by someone who is supposed to understand the issues by working for an insurance company) it rather casts a shadow over other comments made.

The reference to 'these companies' is just the same as saying all advisers are rubbish and you can make the same decisions without going to an IFA.

Staistics referrring to success rates were put forward by the Association of British Insurers (they are the people who put the time bar rules in to start with). Was this because they wanted to fair to their customers or protect their members profits from the mistakes in previous management?

Specific question ' Does anyone know a company that does not charge as much' Yes, we only chatrge 10% plus VAT.

Uphold rates (you wont be more succesful, see ABI comment above)

We win 72% of cases referred to the Ombudsman, they uphold an average of 31%. Overall uphold rate 90% plus which could be compared with the Abbey who rejected 90% plus of all complaints before being chatsised by the regulator and told to do it again. Abbey standard response to any sale made before 1988, complaint rejected. Overturn rate on referral to Ombudsman 100%

Can you please tell me which company you are refering too??