Pension Mortgages? Miss-sold? Claims?

Legacy_user

Hi

Having got Martin's money saving email and noticed the Endowment miss-selling info I was wondering if any one had looked at the 'possible' miss-selling of Pension policies to be used to pay off a mortgage?

Back in 1986 I took out a small endowment policy for a mortgage, moved to where I am now and in '89/90 had to remortgage for family reasons.

In looking at what was available I was told that the endowment policy was not suitable and that I should change to a Pension Policy type mortgage... which at the time of selling "looked" to be beneficial to me - but the same was said of Endowment mortgages wasn't it :mad:

However, in '92 I was made redundant and the, then, two pension policies were frozen and I was unable to pay in to them. Eventually getting back in to work [1998] I was still unable to re-instate these policies and for some time now I have been considering that I was miss-sold these policies.

Admittedly they have still been earning something but when they become usable to buy a pension the sums are very minimal [£200-400 ish] and payable Annually IN ARREAS.:eek:

With Endowment policies having been an area for reclaims for miss-selling IS it possible that Pension Policies should also be looked at... and if so HOW to go about it?

dunstonh

Having got Martin's money saving email and noticed the Endowment miss-selling info I was wondering if any one had looked at the 'possible' miss-selling of Pension policies to be used to pay off a mortgage?

Any product can be mis-sold. So, anything is possible.

n looking at what was available I was told that the endowment policy was not suitable and that I should change to a Pension Policy type mortgage... which at the time of selling "looked" to be beneficial to me - but the same was said of Endowment mortgages wasn't it

Pension mortgages were a good idea for the right person. They were oversold. Mainly by those that thought it was a good idea and could see higher qualified advisers with higher net worth clients doing it and thought they could do the same for their smaller value customers.

However, in '92 I was made redundant and the, then, two pension policies were frozen and I was unable to pay in to them. Eventually getting back in to work [1998] I was still unable to re-instate these policies and for some time now I have been considering that I was miss-sold these policies.

Couple of snags for you. You stopped paying the pension (as you had to in 92) but what alternative did you put in place for the mortgage to make up for that?

With Endowment policies having been an area for reclaims for miss-selling IS it possible that Pension Policies should also be looked at... and if so HOW to go about it?

The problem is more about you not paying anything for the last 20 years. Not the fact you may or may not have been mis-sold 23 years ago. Had you continued paying the pension to date and were complaining of not being aware there could be a shortfall then you could very well have a case. However, not paying anything towards it for 20 years is not the fault of anyone else.

Plus, you have been paying a lot less than you should have been for 20 years. So, in reality, you are unlikely to be financially worse off. Indeed, you could actually be better off compared to someone who did an endowment.

System

Thanks for your input.

The main question is still asking; IF the Pension policies I was sold - and also sold to others that found themselves in similar predicament as I did in that time of unemployment - was another type of mis-selling that should be looked into and taken further... as has with the Endowment and the PPIs, etc., claims - NOT what arrangements I had made or should have made to pay my mortgage. :beer:

As you noted, I was not allowed to pay in to these policies once I was made redundant in 1992. The companies that the policies where with told me that and that they would be 'frozen', classed as 'fully paid up'!? until elected retirement age. So... not paying in to them was because I was told I wouldn't be able to - not that I didn't do or want to once back in work. I think at that stage I'd realised they were not suitable. And at the time of the start of the 'mis-selling of endowments' was starting NO ONE was looking at - or thinking about? - Pension Policies sold along the lines of an Endowment; money put away to provide a lump sum to pay off the mortgage with a little left over!

Pension Policy; money put away to provide a lump sum to pay off the mortgage and provide "something" for a pension!

Similarity???

You ask what did I do then to start paying the mortgage once back in employment? Once bitten twice shy so I went for the 'old fashioned way', sorted out a mortgage with a different lender and a far better rate and have been repaying and reducing the mortgage since - THANKFULLY.

Ok... I 'may' be better off in as much as I get "something" back from the frozen assets but so called management fees will bite in to the small amount payable.. So you reckon an Annual pension, paid in arreas, of something around £200-£400 will make me better off when I retire in 4 years time? Yep...around = to £3.75 to £7.50 'ish a week will go a long way in 2016 :T Doubt I'll be able to buy a 1/2 pint with it by then Still, I could use it to buy a few on my birthday I suppose - if it's paid 'in arreas' each birthday :rotfl:

Your reply doesn't answer my questions. IF it is something that I [and many, many more] have been mis-sold, how to find find out;

IF it is?

&

How to go about taking this further in the correct way as with the different PPI's sold and now being claimed for?

dunstonh

As you noted, I was not allowed to pay in to these policies once I was made redundant in 1992. The companies that the policies where with told me that and that they would be 'frozen', classed as 'fully paid up'!? until elected retirement age. So... not paying in to them was because I was told I wouldn't be able to - not that I didn't do or want to once back in work. I think at that stage I'd realised they were not suitable. And at the time of the start of the 'mis-selling of endowments' was starting NO ONE was looking at - or thinking about? - Pension Policies sold along the lines of an Endowment; money put away to provide a lump sum to pay off the mortgage with a little left over!

The endowment mis-selling issue didnt start until late 90s. Up until around 1996 the media and consumer groups were still promoting them as valid options as were many advisers. That is irrelevant though.

The bottom line is that the adviser you complaining to can time bar the complaint as under FSA rules you have 6 years from commencement (1989 start so expired 1995) or 3 years from being reasonably aware of a complaint issue to make that complaint (1992 was when you changed to repayment basis so three years from that is 1995).

You did what you needed to do. i.e. switch to repayment basis. Everything else is timebarred.

Even if you were not timebarred, you are only talking about a 3 year window of contributions. i.e. £600-700 pounds (and remember tax relief was much higher than as tax rates were around 30% then). The calculation on endowments, to give you an idea, works out the different between the repayment mortgage and endowment mortgage and any difference is what becomes payable. As you are no doubt aware, you pay very little off in the early years of a repayment mortgage and the typical position is that the investment option beat the repayment option in the short term but the reverse in the long term. So, ignoring the time bar, ignoring the case that it may be pre-consumer protection (e.g. if you used a Fimbra adviser and not a PIA adviser) and making the assumption your case would be upheld, you are likely to end up no worse off. Your income in retirement from this plan maybe peanuts but within a few years you would have got back more than you paid in net.

Now, had you kept the pension going for the mortgage, that would be a totally different scenario.

System

dunstonh wrote: »

The endowment mis-selling issue didnt start until late 90s. Up until around 1996 the media and consumer groups were still promoting them as valid options as were many advisers. That is irrelevant though.

The bottom line is that the adviser you complaining to can time bar the complaint as under FSA rules you have 6 years from commencement (1989 start so expired 1995) or 3 years from being reasonably aware of a complaint issue to make that complaint (1992 was when you changed to repayment basis so three years from that is 1995).

You did what you needed to do. i.e. switch to repayment basis. Everything else is timebarred.

Strange... I was only able to see your reply up to this point and only got the rest when I did 'quote'!

Interesting point on the 'three years of being reasonably aware to make a complaint'. It's more along the lines of being unhappy back then that I couldn't start to pay back in to these than being 'reasonably aware of a complaint and should have made one' - and making one. I'd felt obliged to accept what I'd been told by the 'advisor' at the time - - - knowing no different back then - as many did with other 'plans/policies' sold.

Even if you were not timebarred, you are only talking about a 3 year window of contributions. i.e. £600-700 pounds (and remember tax relief was much higher than as tax rates were around 30% then). The calculation on endowments, to give you an idea, works out the different between the repayment mortgage and endowment mortgage and any difference is what becomes payable. As you are no doubt aware, you pay very little off in the early years of a repayment mortgage and the typical position is that the investment option beat the repayment option in the short term but the reverse in the long term. So, ignoring the time bar, ignoring the case that it may be pre-consumer protection (e.g. if you used a Fimbra adviser and not a PIA adviser) and making the assumption your case would be upheld, you are likely to end up no worse off. Your income in retirement from this plan maybe peanuts but within a few years you would have got back more than you paid in net.

Now, had you kept the pension going for the mortgage, that would be a totally different scenario.

Hm... As far as I am aware - and I could be mistaken - any lump sum I take/get may still be used towards the mortgage - even though the mortgage is now a repayment. I've never told the companies that this isn't the case as I have been under the impression, until broaching this subject here, that any lump sum would have to go to pay towards the mortgage as that was what it was taken out for 1st with pension being 2nd - and any shortfall I'd have to make up... in the repayment mortgage... because of not being able to continue to pay in to these policies ???

One policy is due to 'mature' next year with a lump sum... this is all sort of confusing in a number of ways hence the original questions - whether for me and my 'case' or for others that could also feel in the same situation now as I do if their in a similar position.

I suppose, maybe, that I'm better just accepting then that at least I am getting 'something' back on the pension policy which I didn't with the endowment as I'd been 'advised' to let it go...

Appreciate your input and it answers some of the questions and gives other things to ponder over.

dunstonh

Interesting point on the 'three years of being reasonably aware to make a complaint'. It's more along the lines of being unhappy back then that I couldn't start to pay back in to these than being 'reasonably aware of a complaint and should have made one' - and making one. I'd felt obliged to accept what I'd been told by the 'advisor' at the time - - - knowing no different back then - as many did with other 'plans/policies' sold.

One of the risks of advice tax wrappers is changing legislation and changing personal circumstances. Two automatic warnings appear on the advisers report and have done since i started doing this nearly 20 years ago. 1) advice is subject to current legislation and that changes in future may require different advice or changes. 2) your personal circumstances can change and you should seek advice when that happens.

Hm... As far as I am aware - and I could be mistaken - any lump sum I take/get may still be used towards the mortgage - even though the mortgage is now a repayment.

You can do what you like with it. That is your choice.

I have been under the impression, until broaching this subject here, that any lump sum would have to go to pay towards the mortgage as that was what it was taken out for 1st with pension being 2nd - and any shortfall I'd have to make up... in the repayment mortgage... because of not being able to continue to pay in to these policies ???

No. The two things are not directly linked. Its like setting up a savings account to buy something in 10 years time. No link between the two things. Just an intention.