Winterthur Life - Very Poor Investment

poyle

Hi

I took out an endowment in 1994, originally with Provident Life, however now with Winterthur Life. This has now completed 17 of its 25 year term and is proving to be a very bad investment. As I took the policy out so long ago, I am out of time to complain about misselling and have recently attempted to do this without any success and simply advised that I am out of time.

The endowment was due to cover £23,300 of mortgage and the monthly premium is £35.80per month. At the end of 2011 the value is £8780. The value paid in to date approx £7300.

Although I am told that I cannot make a claim about misselling, there is virtually no return on the amount I have paid in. I could have put the money into a low interest savings account and got a better performance.

In all the correspondence I have received from the Company, they show the minimum projected returns based on at least 4% growth. Whilst this might be for illustration purposes only, the actual return is nowhere near to this.

My question is, is there anything I can do, as not only is my investment not returning what was anticipated, it has actually gone down in value in the last couple of years. I am therefore continuing to pay in and being given expectations of at least 4% growth however actually seeing the fund decrease. Surely, this cannot be right?

I look forward to any advice you can give.

Thanks

opinions4u

The 4% figure is mandatory. It's only telling you what will happen if growth is 4%. Not promising or predicting that 4% will be achieved.

Is there still a mortgage to consider in relation to the policy?

Do you still have a need for life cover (e.g. will somebody suffer financially if you died)?

Options include:

1) Keep the policy running and keep your fingers crossed.
2) Make the policy paid up (assuming it's with profits) which means you'll have a reduced amount of life cover, no further premiums to pay and will receive a reduced lump sum on maturity.
3) Surrender the policy, take the money and consider if you need replacement life cover (that will be more expensive these days).

If looking at (2) or (3) establish if the policy has any sort of "Mortgage Guarantee" first. This could lift you up to a much better return and you don't want to lose it by making the wrong decision.

kingstreet

IIRC this plan had built-in reviews which were designed to advise you if the plan would not meet its target value.

Have you been advised the plan was not on target? Have you taken steps to transfer some of your mortgage to repayment, or increased payments to this plan or an additional savings plan?

On the plan in general, the 4% figure you are talking about isn't a minimum return, it's merely the lower of the investment returns the FSA sets out for its guidelines on illustrations.

What you get back will depend on the performance of the underlying investments in which your savings are placed.

dunstonh

My question is, is there anything I can do, as not only is my investment not returning what was anticipated

There is no complaint mechanism allowed for not meeting your expectations or that of a crystal ball.

it has actually gone down in value in the last couple of years.

You may have heard about the credit crunch and global recession.

jamesd

Assuming all £35.80 was paid into investments you've had about 2% growth. But with an endowment there's usually some deduction for insurance. Does your policy pay for insurance out of that monthly premium as well? If just £5.80 of the premium was for insurance the investment part has delivered 4% returns. This is approximate, I used yearly payments for convenience.

The actual value at the end will depend on how markets are at the time and in the years just preceding the end. At the moment they have been down for a while and that's affecting values.

You now require a 9.2% annual return to hit the mortgage repayment target. That's a bit high for an endowment.

Time to adjust with some more payments into some other way of repaying so you won't be short at the end.

jaysb

I've finally thrown in the towel with my endowments - probably should have done so a few years back....now focusing on making overpayments/ISA

suggest you look ahead rather than look back

Conrad

To be fair to the OP, Winterthur had an appauling busines model, and this was common knowledge in the industry 20 years whilst they were merrily seeling awful products. The main point being they were one of those firms around in the 80's and early 90's that were all about deducting as much as they could in charges, in order for the Directors to live an indulgant lifestyle. The other 3 bad offenders that come to mind were Abbey Life, General Portfolio and Allied Dunbar. Go to any meeting at one of these firms and it was like an American evalagist stage managed affair, with emphasis on money, Porshes and not at all focused on consumer outcomes.

If you complain, explain you were noit given the necessary tools to make an informed judgment as to whether this was a firm that provided good consumer outcomes. You were assured by thier image and presentations and as a lay person had no reason to suppose you might not be getting best value. You were unaware charges varied so much from firm to firm. You would not have invested in a high charging policy had you fully understood the implications in the WAY THE DIRECTORS OF WINTERTHUR DID UNDERSTAND THEM (ie, that they fully set the whole thing up to maximise profits and thier own incomes).

In the same way we trust a GP or pharma company to lead us to the best outcomes, we trust big financial firms to do the same. This is why I think they failed in thier duty of care to you.

Not sure if this one is too old to complain on - maybe Dunhston could answer that.

dunstonh

Not sure if this one is too old to complain on - maybe Dunhston could answer that.

Over 3/4 of endowments are now timebarred from complaint. So, the odds are not good but it could be within the 1/4 not. Although the 1/4 not tend to be the better performing ones that have no met the timebar criteria as they are doing well enough.

You get 3 years from the first notification of a high risk of shortfall. These were typically issued around 2001 to 2005. So, by 2007/8, the three years was up. The timebar warnings were typically printed on the annual statements.

jaysb

As above you may be be too late to complain

I did it within the time, went to the financial ombudsman and also appealed to them for two endowment policies a few year ago, was unsucessful, which I guessed would be the case (self-regulated) but wanted to waste the time and effort of the endowment firms and the FOS