Running out of time Mis sold endowment

thepineskid

Dear Money Saving Expert,

Having read Forum letters concerning Mis – Sold Endowments on your site, I was quite pleased to see that many people had had positive out comes from their claims .However, I have been down this path with the company that sold me the policy, a Endowment Investigation company, and even the Financial Services Compensation Scheme. The sticking point in my case is that the date in which I took out my policy which was April 1988. Could I please quote a paragraph from one of my letters:-

The investors compensation scheme (ICS) was set up as a result of the Financial Services Act 1986 which came into force in April 1988. One of the requirements of the Act was that a compensation scheme would be set up within the financial services industry. The commencement date of the ICS was 28 August 1988, and it was not to provided with any retrospective powers to consider claim relating to financial advice which preceded this date. The criteria for payment of compensation were not operational until the ICS came into being and so it would therefore not be equitable to judge financial firms on rules which did not exist at the time they provided the relevant advice to the given investor.
The FSCS replaced the ICS with effect from 1 December 2001. Under our rules, we too, cannot look into investment advice given before 28 August 1988.

So my question is, is there a loop hole of getting round this problem? I have in my position a letter stating that on maturity of the policy (25 years), the mortgage would be paid in full and there would be a surplus of £15,592. As it stands I am looking at a shortfall of around Seven to Ten thousand pound. Surely with this letter alone, they cannot be allowed to get away with some kind of compensation.

thepineskid

Hope you advise on this matter.

holly_hobby

If you do have a letter stating the above - which is clearly providing a gte of at least the target sum, and wholly mis-representative of the product. In my experience and the approach of companies I have advised for, would constitute a gte of at the target sum only - and the selling agt should ordinarilly be found to duly ensure the target sum figure is provided to the policy holder when the policy matures.

This would be the best you could hope for in the event of the Broker or Provider still being active, as you will never get a judgement which accepts the gte of any anticipated surplus.

Which brings me to who the selling agent was, was it an IFA or a CR of a provider that are still active?

If you have utilised the FSCS provision, I suspect it was an IFA/provider whom are no longer trading, and even if fault is proven in respect of the letter you claim to have for the adviser - the directives given re when compensation protection became relevant to the industry, is correct - and must be accepted as just a very unfortunate situation for you regarding the timing of the events.

If not, and this was sold directly by a CR of a provider (even if eaten up by another) or a still active brokerage - then this may change matters.

Hope this helps

Holly

dunstonh

So my question is, is there a loop hole of getting round this problem?

Bottom line - no.

The FSCS only consider cases where the application was signed on or after 28th August 1988.

So, if the firm providing the advice at the time no longer exist, there was no consumer protection in place at the point of application and there is no option available for you now.

Surely with this letter alone, they cannot be allowed to get away with some kind of compensation.

The company doesnt exist. So, they cant pay it. The company didnt pay towards a consumer protection scheme (as it didnt exist back then). So, they are not going to pay it. Who would you like to pay you compensation?

thepineskid

To the two people that kindly answered to my thread - RUNNING OUT OF TIME MIS SOLD ENDOWMENT, fist Holly Hobby please forgive my ignorance but what is 'gte'. and to dunstonh - who said anything about the company thatsold me the endowment had gone out of business? They are very much is business and still trading, they are CHARTERED ACCOUNTANTS?

holly_hobby

Gte = guarantee.

H

Annisele

I suspect dunstonh thought the company had gone out of business because you referred to the FSCS. The FSCS only deal with complaints about firms that are unable to pay claims made against them.

If the accountant is still trading, then the FSCS has nothing to do with your problem. Your complaint needs to be made to the accountant in the first instance. Would I be right in assuming that you've already done that, and your complaint was rejected on the grounds that advice was given before 29 April 1988? If so, there's really nothing you can do. The advice was given pre-regulation, and you are too late for court action (courts have a 15 year "long stop" timebar).

foreversummer

Annisele wrote: »

Would I be right in assuming that you've already done that, and your complaint was rejected on the grounds that advice was given before 29 April 1988? If so, there's really nothing you can do. The advice was given pre-regulation.

The financial ombudsman upheld a complaint I made regarding an endowment I started in 1984 (building society still going). They ruled that even though it was sold before 29th April 1988 the building society still had a 'duty of care'. So you can get compensation for endowments mis-sold before 1988 but I don't know if you have left it too long now.

Foreversummer

Annisele

Ah, building societies are different - mainly they fall within the Financial Ombudsman Service's voluntary jurisdiction (as do most - not all - banks and life assurance companies). FOS can consider pre-88 cases that fall within its VJ.

I'd be astonished if a single accountancy firm signed up to the VJ, so unfortunately that won't help the OP.

You're right that the accountancy firm had a "duty of care", but even if that duty was breached he can't go to court because of the long stop, he can't go to FOS because the firm is almost certainly not within FOS's VJ, and I can't think of anywhere else he could go.

dunstonh

The financial ombudsman upheld a complaint I made regarding an endowment I started in 1984 (building society still going). They ruled that even though it was sold before 29th April 1988 the building society still had a 'duty of care'. So you can get compensation for endowments mis-sold before 1988 but I don't know if you have left it too long now.

That is not correct. Not that you got the complaint reviewed but the reason. Tied providers agreed many years ago to voluntarily accept pre-regulation complaints. So, where an agent of an insurer was used pre 29th April 1988, the FOS will consider complaints. Where an accountant, solicitor or IFA was involved, they had no such voluntary agreement. To be told they still had a duty of care was wrong (in respect of why they agreed to look at it).

who said anything about the company thatsold me the endowment had gone out of business? They are very much is business and still trading, they are CHARTERED ACCOUNTANTS?

As annisele says, you mentioned the FSCS and the FSCS only deal with companies that are no longer trading. The August 88 date only applies to for that reason. You only complain to the FSCS if the company isnt trading and you said you complained to the FSCS.

If the accountants are still trading then it depends on their regulatory position at the point of sale. For example, many accountants came under FIMBRA. When FIMBRA was abolished and brought under the regulation of the PIA, those firms that continued under PIA regulation (now FSA) meant that they had to honour consumer protection right back to 29th April 88. Those firms that ceased trading for financial advice and didnt get PIA authorisation didnt have to offer any consumer protection under the PIA/FSA regulation (so no access to FOS and no FSCS). Many accountants ceased to offer financial advice at that point (it was either 94 or 95 from the top of my head - google would verify that date if it needs to be looked up).

If the firm was regulated under the FSA or it's previous incarnations and you applied after 29th april 1988 and the firm is still trading, then they have to consider your complaint.

holly_hobby

Pre A Day sales (29 April 88) - the adviser did not have to ensure/demonstrate the suitability of the contract to the individual - which is why there is little to be gained in submitting a complaint re suitability to ATR for such sales (as most LCE/investment complaints are related to), as the adviser had no duty to perform that evaluation at the POS, notwithstanding there will probably be little documentation that has survived the passage of time. (which doesn't mean that all performed to such minimum standards). As already stated, many providers whom operated a CR salesforce, did elect to review pre A Day suitability complaints - although to be fair there would generally be little to no POS docs available for assessment.

However, whilst suitability may not be a required consideration re pre A Day sales, the adviser must not make any misleading statements or claims regarding the contract itself ... i.e in this case you claim to have recd as part of the sale, a written guarantee relating to the target sum (& apparently a surplus). The provision of such a gte (re target sum and excluding any potential surplus), one would assume you relied upon as true and directly influenced you to enter into the contractual arrangement.

Assuming the gte is an adviser POS document/diagram/handwritten note on, or in addition to the provided provider illustrations, and the broker is still trading - this compliaint should initially be directed to them for resolution, as being in clear breach of the noted basis of product sale, and the Misrepresentation Act. (or if the gte is part of the policy docs/illustrations recd directly from the provider, this obviously makes it a contractual issue with them instead).

Any complaint/action brought under the above terms and/or Act must of course be validated and demonstrated by robust supporting documentation - which you claim to possess.

However, coming from the side of the broker - revised emvs mostly showing projected shorfalls, have been issued by providers for the last 10 yrs or so - and unless you have raised your complaint within 3 yrs of your first indication that the target value was not guaranteed - I would certainly attempt to timebar you under the Limitation Act 1980. They may not take this approach, but its worth being aware of.

However, I am making these comments in good faith and based on the POS docs you claim to hold - having not reviewed them myself, whether on examination they do indeed constitute a clear gte is another matter altogether !

Hope this helps

Holly

Cashcow_2

I have an endowment policy which has been running since 1995 and due to mature 2020. The intention of the policy, when purchased, was to pay off my mortgage on maturity. However, I have managed to pay off my mortgage very early, therefore, the policy is effectively now a savings plan. It is at RED risk of shortfall and the current surrender value is less than I've paid in My question relates to it's purpose now. The policy contains life insurance, critical illness etc which is not needed as I don't have any debt and no dependents. The bank advised me that I cannot remove these elements of the policy and thereby lower the monthly premiums - is this right?

Also, would an endowment policy have an element of PPI and be valid for a claim if mis sold?

TIA