PEP= Endowment?

Dave_Amos

Hi, Back in 1994 I had a standard repayment mortage but wanted to remortgage to finance an extension to the house. I was advised by a broker to take out a PEP backed mortgage, usual blurb pay of mortgage with lump sum as well. This PEP was converted later to an ISA. I started to pay the monthly amount required. As time passed to PEP seemed to me to be under performing so I doubled and then quadrupled the amount I paid each month, and after 2008, surprise surprise the ISA will be woefully short. The mortgage is due in a few months and there will be a sizable shortfall. My question is do PEP/ ISA backed mortgages come within the same rules as Endowment backed mortgages and is there anything I can do to help with the shortfall?

dunstonh

and after 2008, surprise surprise the ISA will be woefully short.

That is being a bit selective with your dates. By early 2008 there had been a 42% stockmarket crash over the previous 8 months. Since 2008, there has been a strong recovery and 2008/9 was one of the best growth years on record.

My question is do PEP/ ISA backed mortgages come within the same rules as Endowment backed mortgages and is there anything I can do to help with the shortfall?

It may be more useful to use more up to date valuations than 2008. Four years on and your figures will have changed.

Whilst PEP/ISAs were very different, the concept was similar. As is the complaints process which means you had 3 years from being first notified of a high risk of shortfall to make any complaint in that respect.

holly_hobby

Hi,

Any investment sale may be complained and investigated on suitability - not just those acting as mortgage repayment vehicles.

Switching from a repayment mortgage to asset backed repayment method does seem inconsistent - but without being privy to the details of the sale and FF, this is just a very broad observation.

However, your post indicates a clear knowledge and acceptance of the investment profile and risk of the investment medium (both PEP and SS ISA) for some years (I'd guess at least more than 3), which has been evidenced by your increased investment over the yrs to offset poor performance to target value.

This would mean any complaint may be timebarred under the Limitation Act 1980 - by the responsible investigating party - and certainly the route I would be looking to take if I was the IO.

That being said, you do need to make your lender aware of this early doors, and look to try and minimise the impact of the PEP/ISA issue - such as changing a sum at least equal to the anticipated shortfall to a C&I basis (in fact as much as possible within budget would be the most prudent move).

Hope this helps ...

Holly

magpiecottage

holly_hobby wrote: »

This would mean any complaint may be timebarred under the Limitation Act 1980 - by the responsible investigating party - and certainly the route I would be looking to take if I was the IO.

The Limitation Act would be ignored by FOS and a firm under its jurisdiction cannot use it.

In fact the FSA gets quite vexed if firms try to use it (Having a bit of a blonde moment, Holly?)

However, it can still argue the FSA rule DISP 2.8.2R(2) to the same effect.

If the broker is not under FOS jurisdiction - normally because it was never regulated by the FSA or the Personal Investment Authority, or because the OP went straight to court, then the three year/six year rule under Section 14A of the Limitaion Act could be used but it would probably be easier to use Section 14B which places an absolute limit at 15 years from the events to which the dispute relates.