Aviva Endowment shortfall

[Deleted User]

chilmark wrote: »

Having been forced by the Nationwide to take out an endowment mortgage in July 1987 (They would only agree to a mortgage if I took out an endowment they would not allow me to have the repayment mortgage I wanted) I have just received a policy maturity latter from Aviva quoting a £17975.86 shortfall on a £44,000 endowment, the question is, it was blatant mis selling by the Nationwide, they as with many others quoted 3 varying maturity figures, mainly showing the ability to repay your mortgage before the 25 years or have excess funds left on maturity. None as I remember ever quoted the possibility of a £17975.86 shortfall, yes I know they cover their bum by saying "investments can go down as well as up". Having taken the mortgage out in July 1987 I am told there is little the FSA can do as it wasn't formed until 1988, I have written to the Nationwide to see what they would do since it was them who mis sold the endowment and they claim the policy was now "Time barred" in other words they told me in writing that the endowment would be unlikely to repay the £44,000 therefor basically it's tough luck mate. Now Aviva had written to me telling me that they would look to cover under their "promise" the shortfall providing they had sufficient funds, so at the time the shortfall I thought would be covered, however the promise has only covered just £5400 of the nearly £18K shortfall, in between times I guess the investment bankers handling the funds have no doubt been creaming of lovely bonuses for handing mine and others under performing endowment funds.
Question is, is there anything I can do as the Nationwide now just shrug their shoulders, I guess they had their commission ages ago so why should they care what they mis sold
HELP!!!!!

Hi Chilmark

Sorry to see your message. I'd be happy to look into this for you. If you send your policy number, full name, date of birth and postcode to [EMAIL="social@aviva.co.uk"]social@aviva.co.uk[/EMAIL] I will do my best to investigate this for you.

Kind Regards

Stephanie Carrington
Aviva UK Social Media Support

Moffat_man

Hi Chillmark

I find myself in virtually the same stuation as yourself. I also took out an endowment mortgage for £44000 in August 1988. I had never been to see a bank manager before and indeed have never applied for a mortgage. I was told that you took out an endowment and payed interest only on the sum borrowed. Indeed, I was told that my only problem, would be what to spend the excess money on!!
I was advised to complain some time ago now. I think it was 1998. At the time the Nationwide agreed that I had been mis sold, but went on to explain with a lot of facts and figures, that I had in fact done quite well with their product, verses a repayment product(one reason was the payout I got when the Norwich Union floated on the stock exchange).
I accepted their decision at the time but of course now, the situation is far worse. At the time we were only talking about a couple of thousand pounds, but this has now turned into around an £18k shortfall. Yes I know that the price promise is in place, but I don't hold out any great hope about that doing much.
My whole point is this. You were encouraged to complain many years ago when in fact, you only know what you will get on the day that you get it, that's the day it is payed out to you. That is when you should be complaining, as that is the only time that you will know your actual shortfall.

dunstonh

I was advised to complain some time ago now. I think it was 1998. At the time the Nationwide agreed that I had been mis sold, but went on to explain with a lot of facts and figures, that I had in fact done quite well with their product, verses a repayment product(one reason was the payout I got when the Norwich Union floated on the stock exchange).

Probably totally correct at the time. Most endowments hand not fallen into shortfall until around 2000. You were a bit premature. However, if you had concerns that point, you should have switched then.

You were encouraged to complain many years ago when in fact, you only know what you will get on the day that you get it, that's the day it is payed out to you. That is when you should be complaining, as that is the only time that you will know your actual shortfall.

That is not the time to be complaining. It has little to do with shortfall amounts. It has to do with whether you knew there was the potential for shortfall or not. You complained that you didnt know and they said that at that point you were not worse off if you switched to repayment basis at that point (that is how the comparison is made). You decided to continue with the risk knowing there was a risk.

Moffat_man

Thanks for the reply dunstonh.

With hindsight, switching to a repayment mortgage is exactly what I should have done. But at the time we were only talking about a couple of thousand pounds. They then introduced the price promise, which gave me more confidence to stay with them. But is now going to miss its target by a considerable amount, even with that concession in place.

holly_hobby

Unsure when your mge term is ending, I would guess pretty soon if a traditional 25 yr term was taken, unless of course a longer term was selected !!.

If so, you need to start speaking to the lender asap, advise them of the situation , and if they would be willing to grant a repayment extension to enable you to repay the element of shortfall (which should be on a C&I basis of course) - generally they grant circa 5 yrs (subject to affordability).

It is unfortunate that you chose to remain on an interest only endowment backed mge, despite your knowledge of the performance risks and potential shortfall, but the facts are there is a potential shortfall (which may be less than anticipated,as the actual maturity value may be better than the current EMVs, which are based on prescribed FSA rates, also if a with profits plan, you may have the additional of a further terminal bonus), that needs positive action now ..... speak to your lender and get the wheels in motion, so that any shortfall that can't be met from savings, does occur it won't be an out and out shock to them or panic stations for you ..... and if they do refuse the term extension, its worth knowing now whilst you have a little time to calmly consider your options !!

Hope this helps

Holly x

Moffat_man

Thanks for the post Holly.

My bank is Birmingham Midshires. The policy with Aviva, is with profits.

I will speak to them about a repayment extension. Strangely enough, the bank have the mortgage ending a couple of years after the endowment payout date. Not quite sure how that has happened.
Also, does the endowment payout come to me or does it go straight to the bank.

holly_hobby

If the policy is assigned to your mortgage lender, it will be paid to them, with any residual in excess of the os mge, duly forwarded to you.

If of course its not assigned, well it will be paid directly to you, for you to offset against your os mortgage.

Good luck with your repayment extension enquiry (and your final endowment sum of course !!)

Hope this helps

Holly