Endowment Help

Squeekyclean

Hi Folks

I've been reading the posts on claiming back on mis-sold endowment policies but still not sure if I can.
When we were informed we would have a shortfall we were as stunned as everyone else as we were told at the time of taking out the endowment that it would cover the mortgage and give us a tidy lump sum, as everyone now knows this is not the case now.
We would never have agreed to the endowment if we were told that there was a chance it would not perform to the expectations.

The problem is that initially our mortgage and endowment were done through The Leeds building society, later taken over by Halifax.

We contacted the Halifax and they said they told us that the endowment would not cover our mortgage.

We did take out a policy with the Halifax when we moved house, this was to cover the difference in price but still keep the length of our mortgage the same.

I don't disagree with them but I still feel we were mis-sold by the Leeds, so who is responsible and who do we contact, the Leeds no longer exists but the Halifax is where we pay our mortgage.

We only have a couple of years to run on the mortgage and the shortfall is between £5000 - £7500 at the moment, which is a debt we could do without and feel we shouldn't have.

Anyone in the same situation that can offer some help?
Regards
Squeekyclean

dunstonh

When we were informed we would have a shortfall we were as stunned as everyone else as we were told at the time of taking out the endowment that it would cover the mortgage and give us a tidy lump sum, as everyone now knows this is not the case now.

I doubt you were as stunned as everyone else as most people did know it was risk based and nothing was guaranteed. Not many expected it, that is fair to say but they did know it could happen.

I don't disagree with them but I still feel we were mis-sold by the Leeds, so who is responsible and who do we contact, the Leeds no longer exists but the Halifax is where we pay our mortgage.

Over 3/4 of endowments are timebarred from complaint. If you were so stunned a decade ago that you could be in shortfall then why has it taken you so long to consider it now?
You could be one of the 1/4 that are not timebarred. You could ask the insurer as they will tell you.

Your complaint is to the seller of the policy.

We only have a couple of years to run on the mortgage and the shortfall is between £5000 - £7500 at the moment, which is a debt we could do without and feel we shouldn't have.

So actually, you may not be any worse off compared to a repayment mortgage. Endowment mortgages were typically cheaper than repayment mortgages. It was a very common reason for doing them. So, if yours was say £20pm cheaper then over 25 years that equates to £6000. So, yes, you may have a £5000 shortfall but you paid £6000 less. So, you are £1000 better off.

Seeing as you have known about the potential shortfall of £5000 for the last decade, had you put aside £30pm to cover that, then you would not have a shortfall. Indeed, you would still be better off as mortgage rates dropped so much, that you saved more than £30pm (had the conditions that caused low interest rates not happened, then endowments would have paid out more. So, you are still better off by having a shortfall than not having one0

Squeekyclean

Hi dunstonh

Thank you for your insight, as soon as we found out about the shortfall we contacted our mortgage lender The Halifax and explained, they said they told us about the shortfall, so we didn't think we could take it any further as our original endowment was with the Scotish Provident through the Leed's.

It wasn't until recently we found the original book from the Scottish Provident which doesn't state that there could be a shortfall, it only states that "The cash sum will be equal to the basic sum assured increased by any bonuses".
The only part which mentions any fluctuation is the section called "With Profits", which says that "Terminal Bonuses" will be paid at the policies maturity date and these can and do fluctuate.

Please note that our initial endowment policy was taken out in 1988, it was a big decision as no one else in our family had bought a house and we had only the Leed's advisor for help and information.

I can remember what they told us as it was a joke for many years that we were going on a cruise with the bonuses after paying off the mortgage, this would never happen due to the fact that my wife would never go on a boat.

At the time of taking this policy we were told it would cover the mortgage and more and like so many others we find ourselves not being able to cover the mortgage when the policy matures.

If we had been told that a repayment mortgage would have been better then we would have taken that, but the advisor told us the endowment policy was best for us, as they did with many others.

There is nothing in the book to say that the policy may not cover the mortgage, in fact it states it will cover the basic sum assured, which I understand to mean the total of the loan.

Please feel free to tell me if I am reading this wrong as I would like to know what our next step would be.

We can't contact the Leed's as they don't exist anymore.
Do we contact Scottish Provident?

Regards
Squeekyclean

The_J

You need to ask the insurer (whoever the policy is with) if you are timebarred. You need to do that asap.

You really needed to do this 10 years ago, it's not like it wasn't everywhere.

dunstonh

If we had been told that a repayment mortgage would have been better then we would have taken that, but the advisor told us the endowment policy was best for us, as they did with many others.

In 1988, endowments were still considered better. Consumers Association will still recommending them. Had this site existed, Martin would be recommending them. The media were still recommending them. At that point no endowment had ever failed to hit target and most maturities paid out twice to four times more than what was needed.

There is nothing in the book to say that the policy may not cover the mortgage, in fact it states it will cover the basic sum assured, which I understand to mean the total of the loan.

The policy document isnt the place to look for risk warnings. It is a document of fact. The warnings would have appeared on the brochures issued and report issued (depending on when in 1988 you bought it).

The warnings would also have been on your statements for over a decade.

The basic sum assured is not the mortgage target. it is typically a value around 1/3rd of the target amount.

We can't contact the Leed's as they don't exist anymore.
Do we contact Scottish Provident?

You contact Scot Prov to find out if you are timebarred from complaint. If yes, then its end of the road. If not, then you complain to the seller or the current company that took them over.